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House DFL’s budget raises higher-ed funding to encourage tuition freezes

DFL legislators believe trading state funding for a tuition freeze pressures schools to cover rising costs without shifting them to students, says House Speaker Melissa Hortman.

House Speaker Melissa Hortman
DFL legislators believe trading state funding for a tuition freeze pressures schools to cover rising costs without shifting them to students, House Speaker Melissa Hortman said during a press conference Thursday.
MinnPost photo by Taryn Phaneuf

The House DFL’s budget is a clear favorite among Minnesota’s higher education leaders. With $305 million in new money for the next two years, the proposal contains almost twice what the governor wants to spend and more than 4.5 times Republicans’ proposed plan for the state’s colleges and universities.

It not only fully funds all of the University of Minnesota’s $87 million request, it throws in another $27 million to entice the five-campus system to freeze tuition for in-state students for the next two years. “If they were to hold to that, the president would be highly inclined to recommend a freeze,” said Matt Kramer, vice president for university relations.

The budget also includes $159 million for Minnesota State Colleges and Universities, which relies on the state for nearly half of its annual revenue, and asks for a tuition freeze there, as well.

DFL legislators believe trading state funding for a tuition freeze pressures schools to cover rising costs without shifting them to students, House Speaker Melissa Hortman said during a press conference Thursday.

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“The reason why we go to a tuition freeze and we negotiate with the higher education institutions about how much it will cost to fully fund that freeze so they’re not cutting services to students is to drive the pressure up on those institutions to find the savings in the institutions themselves.”

It’s unclear how they’ll achieve that kind of scenario. The DFL’s budget sets a much higher target than the governor’s. Even after revising his budget, setting aside more money for state colleges and universities, Gov. Tim Walz proposes funding that would cover less than a third of Minnesota State’s request and about 60 percent of the U of M’s request.

Senate Republicans propose just $65.7 million in new higher education funding. They haven’t yet specified how that money would be distributed, but it falls way short of the sum of institutions’ requests.

The Senate version: Less money, maybe a freeze

Members of the Senate Higher Education Committee also toyed with a tuition freeze or reduction, but they approach it with more stick than carrot. State aid is one of the few ways lawmakers can influence the way Minnesota higher-education institutions are run, said Sen. Paul Anderson, R-Plymouth, who chairs the committee. The other is appointing or approving regents and trustees who can steer the institutions one way or another on spending.

“We can do things to try to help hold the institutions more accountable, make the institutions more affordable,” he said. “What are we doing to curb the costs? We have to find ways to innovate and do things differently and not just continue this automatic, ‘Well, that’s just the way things are.’”

The committee debated Anderson’s tuition freeze bill over the course of two meetings in March. It may be included in the committee’s bill. Anderson repeated then that the state has to do something about the ever-rising costs of higher education because it prices families out of those institutions.

“What I’m trying to do with this bill … is push these institutions to do better,” he told the committee.

Sen. Jason Isaacson, DFL-Shoreview, disagreed sharply with Republicans on the committee, saying the state has spent eight years forcing higher-education leaders to make cuts, and continuing to cut funding for those institutions will undermine other priorities the state has in workforce, research, and other areas.

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Similar to comments made by their DFL counterparts in the House, Isaacson and others in the Senate committee called for encouraging schools to stop raising tuition by fully funding them with state aid. “When we cut into education like that, we put ourselves in a bad spot.”

How bad is student debt?

Minnesota’s student loan debt totals $27.1 billion, according to New York Federal Reserve Bank data analyzed by the Student Borrower Protection Center, a national organization advocating for better consumer protections for student borrowers across the country. That debt belongs to 775,600 borrowers.

The bachelor’s degree holders graduated with a median debt of $25,521 in 2017, according to the Minnesota Office of Higher Education, which collects student loan data from institutions participating in state financial aid programs. The range of what students owe varies widely depending on the school they attended and the degree they were going for, from $10,536 for a certificate to $143,344 for a professional degree.

By one calculation, Minnesota’s statewide average debt level – $31,734 in 2017 – is the ninth highest in the country.

The House DFL made its move to propose funding a tuition freeze after members campaigning in their communities last year found that the cost of higher education was a common frustration among constituents, said Rep. Connie Bernardy, DFL-New Brighton, chair of the House Higher Education Finance and Policy committee.

“Student loan debt is not just a student crisis, it’s a family crisis,” Bernardy said during the press conference Thursday. “We need to ensure students don’t have to choose between holding off on purchasing homes, starting a family, and saving for retirement.”

Preparing for dealing with debt

Beyond freezing tuition, legislators’ attention is on how to prepare graduates to deal with debt once they have it. HF 550 and its companion, SF 306, would fund grants for graduates to receive debt counseling through Lutheran Social Services. The bills are authored by members of the majority in each chamber.

“It’s really helping those students that are coming out with a large debt to manage,” Anderson said. “This isn’t a high-dollar program.”

State Rep. Connie Bernardy
MinnPost photo by Taryn Phaneuf
State Rep. Connie Bernardy, DFL-New Brighton: “Student loan debt is not just a student crisis, it’s a family crisis.”
Another proposal with multiple hearings in House committees (HF 1424) would add Minnesota to a growing number of states with their own mechanisms for keeping an eye on and helping borrowers navigate a complicated debt servicing industry.

These would be in addition to other programs the state already runs, including loan forgiveness for certain degree holders and education programs for students before they ever take out loans. The state’s goal is to encourage borrowers to take out as little as they can, said Sandy Connolly, a spokesperson for the Office of Higher Education. “If you look at the data, student borrowing is ticking down slightly. We give some of that credit to the outreach.”

The University of Minnesota also reported that students are graduating with smaller debt loads. In a Board of Regents meeting, administrators credited better graduation rates because students who graduate faster have to borrow less money. The university also cited more financial literacy training and debt counseling, as well as more funding for grants that help low- and middle-income borrowers.