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Higher ed chair backs $335M in new aid investments

January 27, 2023
By Sam Drysdale

Higher ed chair backs $335M in new aid investments

Higher education advocates are escalating their calls to steer a large portion of the more than $1 billion in anticipated income surtax revenues to students who attend public colleges and universities.

The Board of Higher Education voted last month to recommend doubling the amount of state-funded financial aid for public higher education students, but the board chair said Wednesday that with record-high revenues coming in, they should aim higher.

Massachusetts ranks 29th in the nation for the amount of aid offered to students, according to the Massachusetts Management Accounting and Reporting System and State Higher Education Executive Officers Association.

"In financial aid we are below the U.S. average. That is a shock to most people, they assume 'We're Massachusetts, we're rich, we're generous.' No, not really," board chair Chris Gabrieli said at a higher education finance forum in Boston on Wednesday. "We're not asking for the sky and the moon and the sun."

About 60 percent of Massachusetts' students took out federal loans in fiscal year 2020 to pay for public higher education.

The board proposed two possible options to reform and invest more in public financial aid, both of which would double the current $200 million investment to about $400 million.

The first proposal is to give $2,000 to every Pell Grant eligible student as a cost of living stipend and $1,000 for moderate income students -- which would help an estimated 100,000 students in Massachusetts -- at a cost of $193 million.

An increase of $193 million in funding would bring Massachusetts from 29th to 17th in state financial aid.

"If we can increase state aid and just close some of those gaps for students, maybe it's $3,000, it would make a huge difference in being able to attend a state university instead of a community college," said college affordability advisor Alayna Blodgett. "There's nothing wrong with community college, but for some students it's such a small gap that if we could increase the aid and be able to close that gap it would make a huge difference for a lot of students."

The other proposal is to eliminate expected family contributions for aid for all students whose family income is below $125,000, with the state covering all family contribution amounts. This plan would cost an estimated $218 million, on top of the current $200 million investment in student financial aid.

"It wouldn't be free for everybody, it would be free for those who reasonably need it and deserve it," Gabrieli said.

The first option would help the state's lowest income students, while eliminating expected family contributions would help moderate income students, he added.

Gabrieli said his personal vote -- though not the official vote of the board -- would be to pursue both options, which would cost the state $335 million on top of its current $200 million financial aid investments.

The board chair's enthusiasm for pursuing aggressive financial aid investment is driven by the expected revenue from a new surtax on household income above $1 million per year.

According to the text of the constitutional amendment that voters approved in November, the surtax is intended "to provide resources for quality public education, and affordable public colleges and universities, and for the repair and maintenance costs of roads, bridges and public transportation." The surtax kicked in on Jan. 1 so much of the anticipated revenue is not expected to flow into state coffers for many months.

"The current system is not adequate to the goals we have. Let us not miss this moment of opportunity to make real change happen," he said Wednesday.

The recommendations are among a mounting pile of requests as competing interests angle for a stake of the income surtax funding, with early and K-12 education stakeholders also vying for a share as well as myriad interests in public transportation.

During discussion on how to best use those incoming funds on Tuesday, Massachusetts Taxpayers Foundation President Doug Howgate advocated for splitting the revenues 50/50, "half for transportation, half for education." Lawmakers have not committed to how they will divide the money between education and transportation investments, or demonstrated that they will limit themselves only to those two areas.

Though there is still a lot of uncertainty around how much revenue the surtax will generate, Department of Revenue Commissioner Geoffrey Snyder said his office expects between $229 million and $265 million in fiscal year 2023, then between $1.445 billion and $1.766 billion in fiscal year 2024.

In addition to their financial aid requests, which if approved at $335 million would represent about a fifth of the total projected revenue for fiscal year 2024, the board also supports Gov. Maura Healey's proposed Mass Reconnect program. The program would offer free community college to adults 25 and over without a college degree.

Management consulting company EY-Parthenon estimated that Mass Reconnect would attract over its first five years 48,000 adults at a cumulative cost of $46 million.

"There are very real people with very real challenges today that we can help, and we cannot wait," said Amanda Seider, executive director of OneGoal Massachusetts. "We cannot hold back from getting rid of every barrier we can to their success, and we're in a fortunate position to have the dollars to do so, we hope that's the decision that will be made."

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