SD colleges facing pinch in aid based on need
By Steve Young
Sioux Falls Argus Leader
SIOUX FALLS (AP) — The money wasn't overwhelming; $28,791 against the multimillions the University of South Dakota sends out every school year in financial aid.
Still, the first dollars this academic year from the new South Dakota Need Based Scholarship Program probably helped to keep a few students in school, said Julie Pier, USD financial aid director.
"I definitely think it could have made a difference" for some students, Pier told the Argus Leader. "With all the kids we deal with, when you can give that student $1,000, even $500, just to buy books, it makes a difference for some."
But it could make less of a difference next school year.
In March, when South Dakota became the last state in the country to offer need-based assistance for postsecondary education, lawmakers appropriated $1.5 million as the principal seed money for the program, and another $200,000 one time to show the effect it would have in this current academic year.
That $200,000 was predicted to produce 800 to 1,000 scholarships ranging from $500 to $2,000. But unless legislators approve more one-time dollars to get back to that $200,000 level next year, it will have only the interest earned on the market value of the $1.5 million investment to pay for the grants.
And because the law allows only 4 percent of interest earned to be used for scholarships — any additional interest is to be used to grow the market value of the investment — that means the state probably will see only $60,000 to $75,000 annually in the next few years.
"I've kind of warned the campuses that there will be less," said Paul Turman, vice president for research and economic development for the state Board of Regents.
The $1.5 million was blended into the state's Education Enhancement Trust Fund, which has seen annual investment returns of 10 percent to 11 percent in recent years, confirmed Matthew Clark, who heads the South Dakota Investment Council.
As the market value of the trust fund increases then, the scholarship program could realize higher returns in the future and eventually get to that $200,000 spending level or more, Clark said.
It also could see higher returns if the Legislature invests more in the principal. Turman expects the South Dakota Student Federation will lobby for such a move this next legislative session. D.J. Smith, executive director of the federation, said the governor hasn't devoted any more for the needs-based scholarship in his preliminary budget.
Meanwhile, the state required the 18 institutions receiving need-based dollars to match them at a 3-to-1 level. In USD's case, that means it had to provide $86,373 to students based on financial need this school year to get the $28,791. Pier said USD paid that $28,000-plus out almost entirely in $1,000 scholarships.
Turman said the regents took a three-year average of Pell Grant recipients at each school to determine how to divide the $200,000 available this year among the 18 institutions participating. So, for example, Augustana College's yearly average of 425 Pell Grant recipients was 3 percent of the total for all the schools, so it received 3 percent, or $6,081.
Brenda Murtha, the financial aid director at Augustana, said the money her school received assisted four students with scholarships ranging from $280 to $2,000.
"I don't think it made a difference in whether or not a student enrolled here," Murtha said. "But it definitely helps out the most needy students. I think the more we can help them, the better."
As federal student aid levels remain relatively flat and tuition increases, "any resource that helps students cover the widening gap ... we're grateful for," Pier said. "Are we grateful for $28,000? Yeah, we are. Would we like to have more? Sure.
"But we're hoping that this is going to grow. Now that this vehicle is in place, we believe it will grow over the coming years and in time will have an important impact."