House OKs nearly $4 billion higher ed budget that would offset state grant program deficit

A program that helps families pay higher educational expenses is drowning.

The state grant program was thrown a life preserver Monday as the House passed the omnibus higher education finance and policy bill. Following the 120-14 vote, HF2431 now moves to the Senate.

Sponsored by Rep. Dan Wolgamott (DFL-St. Cloud), the House Higher Education Finance and Policy Committee co-chair, the bill would provide an additional $33.45 million for the state grant program, which is facing a $239 million deficit. The state grant program helps students from low- and moderate-income families pay higher educational expenses.

The bill contains $3.97 billion in higher education spending for the 2026-27 biennium, including $483.68 million for the state grant program.

“It's about a $4 billion bill, and we had zero target, zero in this biennium, zero in the tails,” said Rep. Marion Rarick (R-Maple Lake), the other committee co-chair. “That seems like a simple thing to do, except for the fact that we had $239 million hole in the state grant program and that huge hole, $239 million, was the equivalent of one entire year's worth of state grants going out to students. So we had zero new money, and we had to fill and fix a huge hole.”

Besides increasing funding to the state grant program, the bill uses what Wolgamott called “levers” to battle the program’s deficit.

Those include capping the state grant increase to 1% of tuition increases; any student assigned a negative parental contribution or student contribution by FAFSA will have an assigned family responsibility of $0; and reducing the maximum lifetime credit cap on state grant awards from 180 to 120.

The state grant increase would be offset by not funding proposed Office of Higher Education base appropriations for summer academic enrichment, aviation loan forgiveness, student loan debt counseling, teacher shortage loan repayment, and concurrent enrollment grants.

[MORE: Download the spreadsheet]

Also called for is an additional $10.58 million for the Office of Higher Education, $4.5 million for the Minnesota State system and $3.78 million for the University of Minnesota.

“I want to be clear, this is not a perfect bill, but it is a good bill,” Wolgamott said. “It's a compromise bill. Even with a zero target to fix the state grant program, to hold harmless the University of Minnesota, to hold harmless Minnesota State, to hold harmless the North Star Promise. These actions that we are going to take in this bill are going to make a tremendous difference, not just for Minnesota students today, but for Minnesota's workforce tomorrow.”

[MORE: Higher education panel approves finance and policy bill]

Total biennial funding for Minnesota State would be $1.76 billion, with the $4.5 million increase going toward emergency assistance grants to students.

The University of Minnesota is to receive nearly $1.5 billion, with an increase of $26.26 million above base for general operations. Of that, $15.26 million is one-time funding in fiscal year 2026 for an ALS research partnership with the Mayo Clinic, $3 million in new funding for the St. Cloud medical school campus, and $1.5 million for emergency assistance grants to students.

To offset the increases, nearly $8 million per year for the University of Minnesota and Mayo Foundation Partnership is not funded.