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College Student Aid: Tennessee's Economic Stimulus

There is no doubt that we live in very uncertain economic times. The stock market continues its
unstable behavior, the Federal government is funding extraordinary bail-outs and stimulus packages, the
state and national unemployment rates continues to rise, and Tennessee’s government is anticipating a
$600 million revenue shortfall resulting in deepening cuts in state government.

During tough economic times higher education usually finds itself one of the first victims on the budget
chopping block. This past year Tennessee’s public higher education community experienced two cuts
totaling about $100 million and future cuts have been rumored. Higher education is always an easy
target for cuts because the colleges can increase revenue through tuition to maintain their operations.
In other words, the burden for paying for college moves from the State to the student.

Private non-profit colleges are not immune from soft financial times either. They are seeing their costs
increase as they struggle to keep tuition affordable. With falling non-tuition revenues, Tennessee’s
private colleges were still able to keep their tuition among the lowest in the nation. But it has not been
easy. Many private colleges and universities are making cuts as their key sources of funding academic
programs and student aid (donors and investments) become less certain.

Serving college qualified low to moderate income students is a shared value among both public and
private universities in Tennessee. Many of these students are the first in the family to ever go to
college. The percentage of low income families served is the same among both public and private
sectors. When comparing average family incomes, Tennessee’s private universities actually enroll
families with an average income $7,400 LESS THAN families attending the State’s public universities.

The ability to continue to serve these families is in peril. With the higher education community raising
their tuitions to offset declining non-tuition revenues, the burden of paying for college is put on the
backs of the students. Tennessee cannot afford to leave low income students without a college

Tennessee has a need-based student aid program called the Tennessee Student Assistance Award
(TSAA) which targets college qualified low income families. This program is critical to helping needy
qualified students choose the college that best fits their academic and social needs resulting in timely
graduation and workforce readiness. However, this program is grossly underfunded. This fall only 33%
of the eligible students received the grant due to a lack of State funding. This left over 50,000 eligible
qualified Tennesseans facing increasing financial burdens forcing many of them to either drop out of
college or incur more debt.

The TSAA program is one of the most important targeted economic stimulus weapons in the State’s
arsenal in its fight against economic uncertainty. It is targeted to college qualified low income families,
it helps break the cycle of poverty through education, it is limited in duration and purpose unlike many
other aid programs, it produces newly trained workforce ready employees, it increases the State’s
higher education attainment rate, and it produces a workforce pool that bolsters existing employers and
attracts future directed industries to Tennessee.

Tennessee’s increased investment into the TSAA program is critical to the future of Tennessee and holds
the potential of increasing the State’s resiliency to uncertain economic times. As Governor Phil
Bredesen prepares his budget for the 106th Tennessee General Assembly’s consideration, action to
increase TSAA funding will be critical to strengthening the State’s commitment to provide higher
education opportunity to the most economically at risk of its citizens.

Dr. Claude Pressnell