Will new stimulus aid reach Minnesota's college students?

The federal Pell Grant program has been around in one form or another since mid 1960s. It helps students like Danielle Goodwin who have potential, but not a lot of money, pay for college.

"It helped me out a lot, I probably wouldn't be here if it wasn't for the Pell Grant," said Goodwin, 19, a freshman political science major at Augsburg College in Minneapolis.

Annual tuition at the private liberal arts college is $26,000 a year. Goodwin pays her bill through a combination of Pell Grants, student loans and scholarships.

Goodwin recently found out she won't qualify for certain student loans next year. So when she heard the stimulus package provided extra Pell Grant money, it was good news.

"I thought that it would definitely increase my chances of staying at Augsburg, which is a school that I could never afford," she said. "I was given the opportunity to come here and that would definitely help out my situation a lot."

The most a student can get right now through the Pell Grant program is $4,731 a year. Under the federal stimulus bill that amount will go to $5,350 this summer and $5,550 by 2010.

Every year the State Grant program provides about $391 million to needy Minnesota college students. The state puts in $145 million, the rest comes from the Pell Grant program.

The stimulus package just passed by Congress would beef up that fund by $50 million in each of the next two years. That should mean more money for Minnesota college students like Danielle Goodwin.

But that increase is far from guaranteed. The reason: Minnesota's $4.85 billion projected budget deficit.

Higher education officials, legislators and financial aid officers all say the additional Pell Grant money could trigger a transfer of the state's portion of financial aid that goes to Minnesota college students. The money would go instead into the general fund to help pay for the state budget deficit.

"The budget is tough. There's lots of dramatic cuts in lots of places, so I think the fear is a legitimate one," said Mark Misukanis, acting director of the Minnesota Office of Higher Education.

His office calculates the infusion of stimulus money would mean $69 million could be taken out of the state grant program over the next two years without reducing the amount of financial aid Minnesota students currently receive. But it would also mean no increase in their aid.

Any decision to shift the money falls to Minnesota lawmakers.

Sen. Sandy Pappas, DFL-St. Paul, chair of the Senate Higher Education Committee, would prefer the money go to students. She admits everything is on the table.

"My caucus has been pretty strong, the Senate has been pretty strong on the state grant, but these are difficult times," she said.

At least one financial aid official says shifting money is neither in the spirit of the stimulus bill, nor the intent of the Pell Grant program.

Kathy Ruby, director of financial aid at St. Olaf College in Northfield, is also the president of the Minnesota Association of Financial Aid Administrators. Her view is shared by the statewide group, she said.

"Certainly the state deficit creates a real challenge for our lawmakers. It's easy for me to say, but it seems clear to me that this is something that students clearly need, and this is something that Congress intended," said Ruby.

At this point no decision has been made about where state money for student aid will end up. The next step will be in early March, when Gov. Pawlenty announces his latest budget recommendations.

Gov. Pawlenty didn't cut the state grant program back in January when he unveiled his fix for the state's deficit. But that was before the federal stimulus bill provided more money for the Pell Grant program.

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