VOL. 37 | NO. 14 | Friday, April 05, 2013
Funds sought by governor for low-income students
By Robert Sherborne
Gov. Bill Haslam says he wants to increase opportunities for low-income students through grants and a new endowment funded by unused interest on the state’s student loan fund and donations. He also wants to increase the number of Tennesseans with college degrees from 32 percent to 55 percent. -- Ap Photo/Erik Schelzig
Finding the “last dollar” needed for a college education can be tough, Gov. Bill Haslam says. But, he notes, less than a fourth of lower-income Tennesseans who are eligible for higher-education grants from the state’s primary financial aid program are receiving them.
So, in a two-pronged approach, the governor proposes:
- Pumping an additional $5 million into college grants to help more lower-income Tennesseans.
- Creating a new endowment that will provide grant money in the years ahead to lower-income students seeking an associate degree or certificate of occupational training.
“We have to make college education more accessible,” Haslam said in his State of the State message.
The primary source of state grant money for college students is the Tennessee Student Assistance Award. Each year, the legislature puts money into these grants, which do not have to be repaid. This year, the funding totals a little more $60 million to help about 32,000 students.
Haslam wants more.
In his proposed budget for next year, the governor has asked lawmakers to add an extra $5 million from taxpayers to help 2,675 more students.
And he doesn’t stop there. Haslam also is asking the legislature to create an endowment that would add a new pot of money to help lower-income students.
It would not, he says, cost taxpayers an extra dime.
The endowment would be funded by the interest on funds that have accumulated in the federal student loan program administered by the Tennessee Student Assistance Corp.
The loan program dates back to 1965, when the federal government decided it would guarantee certain student loans.
States were tapped to administer the program. Banks and other lending institutions lent the money, but the state processed applications, oversaw collections and delinquencies and handled other administrative chores. For this, the state received small fees from each loan. These fees were placed in an operating fund.
Today, that operating fund totals some $75 million, more than is needed for actual operations.
So Haslam proposes using $35 million from the operating fund to create the new endowment. The original $35 million would not be touched; it would remain intact. But the interest on that money would fund new grants.
“These scholarships fill the gaps between students’ financial aid and the real costs of college, including books, supplies, room and board,” Haslam says.
Details of the program remain murky at this point. It is not yet known, for instance, how many students will be helped, or how much each will receive, says David Smith, the governor’s press secretary. Guidelines would be developed once the endowment is created.
There’s even disagreement about the size of the endowment.
Staff members of the legislature’s Fiscal
Review Committee project the state could expect about $875,000 a year in interest payments to fund the grants.
But Haslam believes that number is too low. He thinks, instead, the endowment will provide an additional $2 million a year for scholarships.
In addition to the interest money, the endowment also would accept gifts and donations.
The extra grants and endowment are part of Haslam’s plan to boost the number of Tennesseans with degrees. Coupled with a $5 million push to provide online degrees to adult Tennesseans, the governor wants 55 percent of the state’s workers to have degrees by 2025, his so-called “Drive for 55.”
“The reason is simple,” he says. “To be the No. 1 state in the Southeast for quality jobs, we have to have a well-educated workforce to attract and fill those jobs.
“We want our state to be the place where our best and brightest want to earn their degrees and ultimately work, live and raise a family.”