College aid soars, but is it enough?

As we explained in August, tuition has ballooned 40-118 percent at Michigan universities in the past five years as campus spending continues to outpace inflation and state taxpayer support for university operations has dwindled.

Yet taxpayer-funded financial aid for students is more than double what it was a decade ago. That’s good news for students and parents struggling to pay the freight for degrees and the path toward prosperity they can provide.

A new report from the Michigan House Fiscal Agency is a great resource for students and parents seeking to understand the complex financial aid game or for any citizen interested in how your tax dollars are spend. Key insights from the report:

Michigan taxpayers provide $227.5 million in direct state funding for student financial aid. That’s $120 million more than in 1998-99. Much of the funding is provided through investment of the state’s tobacco settlement windfall.

Despite that funding increase, Michigan is losing what amounts to a national arms race in financial aid. Michigan ranks 22nd nationally in financial aid grants per student, and doles out less than one-third as much financial aid as leading states like South Carolina and Georgia. While Michigan financial aid is up 131 percent since 1996-97, that ranks only 27th nationally. Leading states, including Montana, Tennessee, and South Carolina, have increased financial aid ten-fold or more.

Large numbers of low-income students benefit from a special Tuition Incentive Program (TIP), but the program touches only a small fraction of all young people who are eligible. The TIP pays for up to 80 credit hours toward an associate’s degree. Students who meet the family income guidlines for Medicaid health care coverage are also eligible for TIP. The number of students benefitting from TIP has more than tripled, to 10,500, since 2001. But that’s only one out of every 17 students who are elligible.

A little more than a third of the total state-funded financial aid goes to students of private schools, with much of that funding provided through the Tuition Grant Program, a program unpopular with some fiscal conservatives and Gov. Jennifer Granholm (she sought to kill the program several years ago). A full third of the Tuition Grant Program (more than $19 million) goes to students at one institution: Baker College.

A five-year-old scholarshp program designed to boost the ranks of nurses in Michigan has been largely successful. But a quarter of all nursing scholarship recipients have failed to meet the requirements of working directly as a nurse or nursing teacher and have had to repay the money.