SF4907

Purpose

Create a North Star Promise scholarship program that (a) encourages Minnesota students to study in fields with high job demand, (b) requires students to live and work in Minnesota after graduation, and (c) tracks and reports on the program’s outcomes to the Legislature.

Who can get the scholarship (eligibility)

• The student must complete either the FAFSA or Minnesota state aid application by 30 days after the term starts.
• Family adjusted gross income must be under $80,000.
• Must be a high school graduate (or equivalent) and at least 17 years old, with admission requirements met for an eligible college or university.
• Must not already have earned a first bachelor’s degree at the time of award.
• Must be enrolled in at least one credit in fall, spring, or summer terms.
• Must be enrolled in a program of study that is eligible under the program’s rules.
• Must not be in default on any federal or state student loan.
• Must not be more than 30 days in arrears on court-ordered child support (or be in a written payment agreement if in arrears but compliant).
• Must not have been convicted of fraud related to obtaining federal Title IV funds.
• Must be making satisfactory academic progress.
• Must sign a contract agreeing to convert the total scholarship award to a student loan if residency/employment requirements are not met.

Eligible programs and industries

• Scholarships are limited to programs of study that lead to employment in industries and occupations labeled as in-demand in Minnesota.
• The list of in-demand industries/occupations is determined by the Department of Employment and Economic Development (DEED). The Office of Higher Education (OHE) uses DEED data and reviews the list at least every three years, updating as needed.
• The Office of Higher Education also reviews and updates the list of approved programs every three years to stay aligned with labor market data.

Residency and employment requirement (the core obligation)

• To receive the scholarship, a student must agree to reside in Minnesota and work in Minnesota for a five-year period starting within six months after finishing the degree or credential.
• If the recipient fails to meet the residency or employment requirement, the entire scholarship award must be converted to a student loan with interest (rate set under state law).
• Waivers may be allowed if, within six years of the initial award, the student has not completed the degree, has not earned a bachelor’s degree, or is no longer enrolled in any postsecondary institution.
• Deferment options exist to allow:
  • Attendance in a postgraduate program (if enrolled at least half-time),
  • Full-time volunteer service (e.g., Peace Corps, AmeriCorps, or similar),
  • Extreme hardship.
• If a recipient becomes ineligible for the scholarship or its terms are terminated, the residency/employment requirement still applies and must be completed within six years of the initial award, unless a waiver or deferment applies.
• If a student earns more than one degree/credential with this scholarship, the residency/employment requirement only applies once.
• The obligation ends upon the student’s death or permanent and total disability.

Financial terms and consequences

• If the residency and employment requirement isn’t met, the total scholarship amount is converted to a student loan with interest.
• Waivers and deferments provide flexibility under the circumstances described above.

Oversight, reporting, and data collection

• The Commissioner of Higher Education must prepare:
  • A preliminary report by September 1, 2025.
  • Annual reports starting February 15, 2026.
• Reports cover:
  • Status of the scholarship fund.
  • All eligible programs of study under the in-demand criteria.
  • Participation data per eligible institution, including:
  • Number of recipients in the prior academic year.
  • Average and total award amounts.
  • Demographic data of recipients.
  • Total number of students enrolled in eligible institutions.
  • Retention rates and graduation numbers.
  • Details on the number of semesters attended by graduates.
  • Eligible programs in which recipients were enrolled.

Relationship to existing law

• The bill adds new subdivisions to Minnesota Statutes related to the North Star Promise program, specifically defining eligible programs, in-demand industries, and the residency/work requirements.
• It introduces a loan conversion mechanism for noncompliance and creates waivers/deferrals and reporting requirements.

Timeline and implementation notes

• Residency begins within six months after completing the degree or credential.
• Five-year Minnesota residency/work term follows.
• Three-year review cycles for in-demand list and eligible programs.
• Reporting milestones begin in 2025 and continue annually.

Relevant effects and goals - Aligns state scholarships with labor market needs. - Encourages graduates to stay and work in Minnesota after finishing their programs. - Builds ongoing data to evaluate the program’s impact on workforce and higher education.

Relevant Terms - North Star Promise scholarship - in-demand industries and occupations - Department of Employment and Economic Development (DEED) - Office of Higher Education (OHE) - Minnesota residency and employment requirement - five-year term - reside and be employed in Minnesota - scholarship-to-loan conversion - FAFSA / state aid application - family adjusted gross income (AGI) under $80,000 - satisfactory academic progress - default on student loans - child support arrears - waivers and deferments - Peace Corps / AmeriCorps / volunteer service - extreme hardship - death or permanent disability - preliminary and annual reporting - eligible programs of study - labor market data - program review every three years