Michigan will have its own generous free college program, but it is doing it in a unique and potentially complicated way.
The Michigan Achievement Scholarship will provide up to $5,500 for students studying at Michigan’s 4-year public colleges and universities. Smaller awards for students attending tribal and community colleges or private 4-year colleges will be available.
What is Free College?
Free college initiatives, or promise programs as often labeled, is one way to reduce the price of college for students. The programs come in various forms. But at their core, they promise that tuition and fees will be covered by grant money so eligible students do not have to take out loans or pay out-of-pocket for their tuition and fees. There are significant differences in how such programs can be designed, with the most important distinction being whether they are set up to be a first-dollar or last-dollar program.
First-dollar versus last-dollar free college programs
First-dollar programs cover tuition and fees up front, allowing students to use the federal Pell Grant and any grant funds from their state or school to pay for books, housing, transportation, and other expenses. Last-dollar programs promise to top up students’ financial aid if federal and state grants do not cover all their tuition and fees. Last-dollar programs are less expensive for states to pay for and, thus, more common.
First-dollar programs provide more support to students from low-income households. Students with the lowest personal and family incomes are the most likely to already receive federal and state grants that would cover tuition and fees, leaving no room for a last-dollar promise program to add to their financial aid.
There are very few true first-dollar programs at the state level. New Mexico recently introduced a strong first-dollar program that will hopefully act as a model for other states.
How Does The Michigan Achievement Scholarship Work?
Any Michigan student who wants to be considered for the scholarship must complete a Free Application for Federal Student Aid (FAFSA). This federal form determines what types of financial aid a student is eligible for based on their and their family’s financial information. To qualify, students must have an Expected Family Contribution (EFC) of less than $25,000. EFC is the number provided to students when they complete the FAFSA and serves as an indexing figure to help determine eligibility for different types of financial aid. Generally speaking, higher EFCs mean that students are eligible for fewer types and total amounts of financial aid.
Students attending a community or tribal college will receive $2,750 a year. At public universities, the maximum award is $5,500, and at private, non-profit universities, the maximum is $4,000. Students will be able to receive the award for up to five years, three of which can be at a community or tribal college. Students attending for-profit colleges are not eligible for the funds.
A unique feature of the Michigan Achievement Scholarship is that some of the money is awarded on a first-dollar basis and some last-dollar. For example, a public university student will have the first $2,500 of their scholarship awarded as first-dollar funds and the remaining $3,000 as last-dollar, so what does that mean?
Why Is The Michigan Achievement Scholarship Unique?
It is very unusual for a free college program to adopt a hybrid of first and last-dollar approaches. This is mainly because it makes it much more complicated, harder to explain to students, and harder for financial aid offices to administer properly. However, there are some benefits.
There are likely two goals behind creating the program this way. First, it reduces the number of students who would get no additional financial aid if it was a pure last-dollar model. Last-dollar free college programs are often criticized for giving more support to middle and higher-income students who are less likely to receive Pell Grants or other types of aid based on financial need. Students who already receive things like the Pell Grant often have their tuition and fees paid but struggle to afford books and living expenses while in college. By providing some funds on a first-dollar basis, students who already have their full tuition and fees covered by other grants and scholarships will still get some additional help with things like books and living expenses.
The second goal of a hybrid approach could be that it reduces the program’s overall cost. By splitting the difference between the two approaches, it appears that Michigan is trying to balance generosity with budget constraints.
The program will cost the state an estimated $169 million in the 2023-24 fiscal year and over $562 million four years later. The new funding doubles how much money Michigan is putting towards financial aid.
Free college programs continue to grow at the state and local levels and can make it much easier to afford college. Students interested in figuring out whether they qualify for free college might not know where to start. College Promise, an organization that promotes free college programs, recently created an online tool to help students find free college programs near them.
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