Meeting The Demand For The Monetary Award Program: ISAC Focused On Solutions To The Funding Shortfall

Demand for the Monetary Award Program (MAP) is increasing at an unprecedented rate. At the end of the day on April 18th, 2010, the approximately $400 million --the amount available for MAP in the 2010-11 school year -- was all spoken for. This forced an April 19th suspension of award announcements, the earliest in the program's history.

This year it is estimated that close to 150,000 students that are eligible for MAP awards will not have the opportunity to claim this help from the State of Illinois. On this page we are detailing the thousands of students who are still filling out the 2010-11 Free Application for Federal Student Aid (FAFSA) but for whom there will be no MAP grants. A conservative estimate of funding needed to pay for the demand is at least $200 million.

Not withstanding the broad support for this life-changing program and the great effort legislators and the Governor have made to support MAP, the funding is falling far short of the need. This is one of the unfortunate consequences of having a program for which demand swells at just the time when the State's general revenue fund can least afford to make increases.

Along with other agencies and institutions that serve college students, the Illinois Student Assistance Commission is committed to working to seek meaningful solutions to this problem. This group effectively advocated for a supplemental appropriation in support of MAP in FY 2010 and must come together again to identify new sources of capital to invest in Illinois’ students. Funding at least part of MAP through another revenue source may be the only way to serve the increased number of students eligible to receive a grant.

Tough financial times - and the prospect of more to come - forced the Commission to seek to diversify funding at this time of increased demand. ISAC has proposed to issue revenue bonds to help fund the need-based financial aid program. The education acquired by MAP recipients leads to better jobs and higher state income tax revenues. These revenues could then be used to pay off the bonds. On a smaller scale, several workforce development and training programs in other states are using a similar funding mechanism.

Under this proposal, the bonds would be paid with a diversion of state income taxes paid by those specific MAP recipients. ISAC analysis of Illinois Department of Revenue (IDoR) tax revenues generated by students who received MAP grants at community colleges shows that a large majority of community college MAP recipients pay taxes every year, and these taxes are significant. Analysis by financial advisors indicates the taxes are sufficient to fund revenue bonds used to pay for MAP. Further, the data show significant financial gains on the whole due to community college attendance, which are reflected in large increases in post-college tax revenues.

If created by legislative action, the Monetary Award Program Capital Investment Bond initiative will use revenue-supported bonds to supplement the state's appropriated funds for Illinois MAP grants. This self-sustaining plan for funding a portion of MAP would enable more students to complete a degree or certificate program and then go on to earn higher income than before they began their studies, which then results in higher income tax receipts.

A task force to review the proposal has been established by the Illinois Board of Higher Education (IBHE). Conclusions are to be presented at IBHE's February 2011 Board meeting

Resources relative to the impact of funding shortages on the Monetary Award Program and potential solutions to the problem of unmet demand can be found below.

Meeting The Demand For The Monetary Award Program: ISAC Focused On Solutions To The Funding Shortfall

Resources

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