Michigan to invest $560M on scholarships to ease college affordability crisis

• New scholarships would offer up to $5,500 for students at Michigan’s public universities
• 3 of 4 Michigan families would be eligible for the money
• State will spend over $560 million annually on program when fully implemented

Michigan lawmakers approved a sweeping college scholarship program Wednesday that represents the biggest investment in addressing college affordability in over a decade.

First outlined in a June spending bill, details of the Michigan Achievement Scholarship emerged on Wednesday. The scholarship will provide up to $5,500 per student per year at Michigan’s 15 public universities and colleges.

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Advocates say that, for some students, that could be the difference in attending college or not. Since COVID, the percentage of students enrolling in college within six months after graduation has dropped to 55 percent in 2020 from 60 percent the year before.

“This is going to be the tipping point for many graduates to head off to college next fall,” said Dan Hurley, CEO of the Michigan Association of State Universities, which represents the state’s 15 public universities and colleges.

The Senate approved the scholarship plan 33-0 on Wednesday. The House approved the plan that night, 78-26, with Republican composing the majority of dissenting votes.

Advocates predict 75 percent of Michigan families would qualify for the money, which follows decades of soaring college tuition. In-state tuition at the University of Michigan rose 3 percent this year alone to $16,736.

The program also will provide up to $4,000 per student at private nonprofit colleges and up to $2,750 per student at community colleges and tribal colleges.

A related program would grant $2,000 for up to two years at a “qualified occupational training program” like those for manufacturing, information technology, health care and the construction industry.

To qualify, students must be from families where the “expected family contribution” — based on household income and ability to pay — is less than $25,000. 

An online calculator estimates that a family of four with one college student could have an adjusted gross income of $108,000 and qualify. The median household income in Michigan is just over $59,000.

The scholarships are not available to students who attend schools outside of Michigan.

The program will cost the state an estimated $169 million in the 2023-24 fiscal year and over $562 million four years later. 

Legislators had outlined the contours of the program in June when they approved $250 million for college scholarships but no details on how they would be implemented. 

That is twice as much as the $122 million the state spent in 2020-21 on a combination of merit and need-based aid.

The program would begin helping students in the high school class of 2023 and students could get the scholarships for up to five years, though no more than three while attending community colleges.

"This is going to help a lot of young kids get to college, it's going to help our economy and it's going to be good for a lot of people in our state," said Sen. Jeff Irwin, D-Ann Arbor.

Sen. Kim LaSata, R-Niles, said the funding “could make a tremendous difference” for families struggling to pay for school, as well as help businesses seeking workers. 

“We’re experiencing a decrease in skilled workers and many positions in the trades are left unfilled due to lack of qualified workers,” LaSata said.

“These scholarships will significantly reduce or potentially even eliminate the need for student loans for thousands of people,” she added.

 she said in a statement. Students who were eligible for a Michigan Competitive Scholarship would have to relinquish it. However, those scholarships, which are based on merit and need, currently average about $2,600 a year. In 2020-21, about 22,200 students qualified, which costs the state just under $30 million on that program, a small fraction of what the new program anticipates.

The scholarship money could help alter the state’s current enrollment trends: fewer high school graduates are choosing college and fewer students are even graduating because of declining birth rates. 

That’s led to fewer students on campus at several of Michigan’s public universities. Enrollment at 12 of the state’s 15 public universities is down nearly 46,000 students, collectively, since 2012. 

All students who graduated from a Michigan high school and are enrolled in college would be eligible. To continue getting the scholarship, students have to maintain “adequate student progress.”

Faced with a looming deficit, then Gov. Jennifer Granholm cut the Michigan Promise Scholarship in 2009. That offered high school graduates up to $4,000 per student and cost the state $140 million a year.

Hurley of the state university group said education and business leaders have lobbied for additional state-based financial aid that has put Michigan near the bottom of national rankings. 

According to one source, Michigan ranks 39th in need-based scholarships.

The new money doubles what the state is putting toward financial aid.

“This is a big day for Michigan,” Hurley said. “It’s going to make a very substantial impact on college affordability.”