A Minnesota Senate committee heard the governor's policy and budget bill for the Minnesota Office of Higher Education on Oct. 12, adopting two amendments and laying the bill over for later consideration.

The bill would add a grievance-resolution process to the campus misconduct statute (135A.15); expand protections for pregnant and parenting students to private institutions; consolidate multiple program reporting requirements into a single, streamlined report; revise several licensing and registration rules and fees for postsecondary institutions; and change parameters for the state grant program, the agency said.

The changes matter because they alter how the state allocates financial aid and how the Office of Higher Education (OHE) oversees institutions. Commissioner Dennis Olson, commissioner of the Minnesota Office of Higher Education, told the committee the governor's proposal pairs modest new funding with statutory adjustments that OHE says are needed to keep the state grant program within available appropriations.

OHE's policy changes and reporting consolidation

Nikki Oliver, director of government relations and community engagement for the Office of Higher Education, summarized the bill's policy sections. "Section 1 is the campus ****** misconduct, adding a grievance resolution process to that statute, 135A.15," Oliver said. She said the bill adds definitions, extends statutory protections for pregnant and parenting students to private institutions, and consolidates reporting requirements so OHE will produce one report for competitive grants and a separate report for student-loan-repayment programs.

Oliver said OHE is repealing three reports the agency views as seldom used (study abroad report, transfer student report and dual-credit exam-based acceptance report) and will rely on other sources for that information. "We're removing these reports to free up capacity for staff to do research projects on more pressing matters," she said.

Wendy Robinson, assistant commissioner for programs, policies and grants, told the committee the Minnesota State System Research Office is creating its own transfer report and that OHE's current transfer report is a narrow year‑to‑year snapshot. "The types of questions that both students and institutions might have about transfer behavior will be found in other locations and in a more timely fashion," Robinson said.

Licensing, registration and fee changes

Andrew Wald, general counsel and director of compliance at OHE, described the agency's licensing and registration work and said the unit currently operates with three staff and a backlog of program reviews and complaint investigations. Wald said the bill would revise definitions, narrow the scope of some licensing requirements, and simplify and raise several fees so the unit can hire an additional full‑time academic program reviewer and address backlogs.

Wald said fee revisions include changes for institutions participating in the State Authorization Reciprocity Agreement (SARA), changes from degree-level to full-time-equivalent enrollment for some fees, and consolidated renewal fees. He estimated the proposed fee changes would raise roughly $341,000 annually to support staffing and technology upgrades.

State grant parameter changes and budget items

Commissioner Olson and Carrie Schneider, OHE research director, outlined proposed changes to the state grant program that OHE says are intended to bring projected spending within appropriated resources and avoid more severe rationing.

Key elements described by Olson and Schneider include:
- A recommended investment of $7,500,000 per year (about $15,000,000 over the biennium). Olson described that as a partial offset but said it would not fully eliminate the need for statutory adjustments.
- Authority changes to allow the agency to set a minimum parental or student contribution to zero when calculating awards, eliminating negative Student Aid Index (SAI) values used in the FAFSA calculation.
- Reducing the living and miscellaneous expense allowance to 110% of the federal poverty guideline.
- Increasing the assigned student responsibility to 51% (a 1 percentage-point increase beginning in fiscal 2027) and increasing the assigned family responsibility (AFR) to 100% of the federal need analysis for families with a positive parental or student contribution beginning in fiscal 2026.
- Reverting the deadline for state grant receipt to the 30th day of the term for which the student applies for aid.

Schneider and OHE staff said the program has faced large, unanticipated demand. OHE staff cited an enrollment increase of about 18,000 students from fall 2023 to fall 2024 reported by the National Student Clearinghouse, along with tuition increases and late changes to FAFSA needs-analysis parameters, as major drivers of spending growth.

Lawmakers questioned the proposals. Senator Duckworth asked whether eliminating multiple reports would reduce the ability to evaluate program impact; Robinson and Oliver said the agency intends to recreate the same information in a consolidated report with a single due date to make comparisons easier.

North Star Promise and residency

Commissioner Olson described two changes the governor proposes for the North Star Promise program: to prevent the program from covering out-of-state tuition and to prevent it from covering courses that are ineligible for financial aid. Olson said the University of Minnesota Twin Cities estimates eliminating instances in which North Star pays higher nonresident rates could save about $1 million annually; Minnesota State estimates about $1,580,000 annually. "We want to apply the statutory definition of resident for all state financial aid programs to the North Star Promise program as well," Olson said.

Other items

OHE also proposed technical changes, repeals of obsolete rules, and a no‑general‑fund recommendation to increase the amount reserved for student loan bonds from $10,000,000 to $25,000,000 per year. Olson said the loan-bond change is self-funded (bond proceeds) and does not affect the state general fund.

Committee action and next steps

The committee adopted two amendments by voice vote during the hearing: the A1 amendment and the A3 amendment. The committee then laid the bill over for further consideration. The hearing included questions from multiple committee members; OHE said it would provide additional details on the consolidated reporting plan and on some operating-expense fluctuations.

Votes at a glance

- A1 amendment: adopted by voice vote (count not specified).
- A3 amendment: adopted by voice vote (count not specified).
- Bill: laid over for further consideration.

Ending

OHE staff told the committee the changes are intended to streamline reporting, clarify existing program rules, improve consumer protections through a better‑resourced licensing unit, and adjust financial aid parameters to align projected spending with available appropriations. Committee members pressed for more detail on consolidated reporting, the state grant impacts on students and families, and operating-cost fluctuations; OHE said it would follow up with additional information.