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FAFSA changes, rising need and underspent scholarships focus of MHEC student‑aid briefing
Summary
The Education and Economic Development Subcommittee reviewed the Maryland Higher Education Commission’s Office of Student Financial Assistance fiscal 2026 allowance, focusing on FAFSA changes, program demand shifts, and underspending that prompted DLS to recommend reductions in some scholarship lines.
The Education and Economic Development Subcommittee reviewed the Maryland Higher Education Commission’s Office of Student Financial Assistance (OSFA) fiscal 2026 allowance, with DLS and OSFA explaining how FAFSA changes, program demand shifts and underspending in several scholarship programs affect the state's student‑aid budget.
DLS analysis and FAFSA impacts
Micah Richards of the Department of Legislative Services summarized the OSFA analysis. Richards said the FAFSA Simplification Act replaced the Expected Family Contribution (EFC) with the Student Aid Index (SAI), causing technical delays and an extended application deadline for the 2024–25 award year; Maryland’s FAFSA completion rate fell to roughly 50% (about 8 points below the prior year) but remained above the national average (transcript blocks starting at 3800.355). Richards reported substantial increases in guaranteed‑access initial awards (a 69% increase) and Educational Assistance initial applicants (146% increase for fiscal 25 initial applicants), and noted that statute requires GA awards be fulfilled before EA funds are allocated.
Program underspending and DLS recommendations
Richards and DLS highlighted consistent underspending in multiple programs that prompted DLS to recommend reductions: a $5,000,000 reduction to the Community College Promise Scholarship (from $15 million to $10 million mandated funding in BRFAA), and reductions of $4,000,000 proposed for the Teaching Fellows for Maryland Scholarship because the programs did not attract enough eligible applicants to expend full appropriations in recent years. The DLS report documented large closing balances in the Need‑Based Student Financial Assistance Fund and recommended releasing previously withheld funds after MHEC’s report compliance was confirmed.
OSFA and MHEC responses and outreach
Al Dorsett, executive director of OSFA, told the committee that MHEC had implemented several measures to respond to FAFSA changes, improve technology and expand outreach. OSFA is procuring a modern financial‑aid management system to replace MDcap, said Dorsett, with improved mobile access and data integration. Dorsett described outreach to law enforcement agencies and police/probation scholarship stakeholders, promotion via GovDelivery and social media, and in‑person outreach events; he also described vendor selection processes and said the procurement had faced bid protests now cleared for Board of Public Works consideration.
Promise, Next Generation Scholars and program reporting
DLS recommended a $5,000,000 reduction to the Promise Scholarship due to previous underspending, but MHEC opposed immediate reduction and asked for a two‑year transition because the program had been decentralized to campuses and early spending may not yet be visible in aggregated reports. MHEC also reported on Next Generation Scholars and other committee narrative requests and said some reports had been submitted to the legislative library and to DLS. On mandated appropriations for police‑and‑probation scholarships and loan‑repayment programs, Richards reported mandated levels and earlier underspending; MHEC described outreach efforts and that some program applications remain open.
Ending
No votes were taken during the briefing. DLS recommended several budget adjustments and committee narratives; MHEC and OSFA urged the committee to consider implementation timing and to allow time for decentralized program changes to show in spending data before cutting mandated appropriations.
