New Mexico to invest nearly $1B in tuition-free program

This month, New Mexico Governor Michelle Lujan Grisham signed Senate Bill 159 to establish a Higher Education Trust Fund totaling $959 million for scholarships for recent high school graduates and returning students, according to a statement. The trust fund will support state financial aid programs for public colleges and universities, such as the Lottery Scholarships, available to recent high school graduates, and Opportunity Scholarships, which cover tuition and fees for state residents who are returning students or starting college later in life, Higher Ed Dive reports.

The legislation ensures New Mexico will be able to continue covering tuition for eligible students even in years when less state funding is available. The Tax Stabilization Reserve Fund finances the Higher Education Trust Fund, which will provide $47.95 million in higher education funding in Fiscal Year 2025.

“By creating this fund, New Mexico is keeping our original promise of tuition-free college for residents and cementing our status as the nation’s leader for college equity and access,” Gov. Lujan Grisham said.

New Mexico is the first state to create trust funds for both early childhood and higher education programs, with a total of $32.4 billion set aside for cradle-to-career education. New Mexico’s Higher Education Trust Fund is the largest created by any state, followed by Tennessee, which has set aside approximately $775 million, and New Jersey and Alaska, which each have a higher education trust fund totalling about $400 million.

Creating a self-sustaining higher ed fund

Since New Mexico launched the Lottery Scholarship in 1996, the program has covered full tuition for around 10,000 students annually. Students who pursue bachelor degrees and meet eligibility requirements can receive the scholarship for up to seven semesters or when they complete their first bachelor’s degree, whichever comes first. Students who attend a community college can receive the Lottery Scholarship for up to three semesters. 

In 2016, economic downturns in the state forced New Mexico to scale back the Lottery Scholarship to cover only 60% of students’ tuition. In 2021, the governor used federal funds to return coverage to 100% of tuition. According to the New Mexico Higher Education Department, 86% of Lottery Scholarship recipients who had the scholarship for six semesters or more earned a degree or certificate.

In 2022, New Mexico made permanent its Opportunity Scholarship, a program available to all students that has no eligibility restrictions based on income, making it an outlier among other tuition-free programs.

The program is described as a middle-dollar scholarship, which allows students to apply Opportunity Scholarship money to cover costs after using state aid but before federal financial aid is used. Most tuition-free programs are last-dollar scholarships, which help students only after they have used state and federal aid. At least 32 states have statewide tuition-free programs, though the majority covers only tuition for community college.

Returning students are eligible for Opportunity Scholarships provided that they meet credit hour and GPA requirements; they can receive the aid until they complete a degree or attempt the maximum number of credit hours (90 credit hours for students pursuing two-year degrees and 160 for students pursuing four-year degrees).

The majority of Opportunity Scholarship recipients are Latine, identify as women, are under 24 years old, and are eligible for Pell Grants. Enrollment at New Mexico state colleges and universities has risen by more than 7% since 2021, a year before the program began.

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