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Last Dollar Scholarships Brief Ahead of Community Colleges for Iowa’s 2024 Day on the Hill

Posted on February 19, 2024 at 6:00 AM by Katrina Callahan

Helping students gain access to affordable, high-quality education has been one of the biggest priorities that Iowa’s community colleges have had since our inception in 1918. In 2018, Governor
Reynolds wanted to help community colleges meet this goal while also helping to bridge workforce gaps and expand the economy. She helped create the Future Ready Iowa Act with the
goal of funding the state’s workforce needs and cultivate employer buy-in and partnerships with education entities. One portion of this proposal was called the Last Dollar Scholarship (LDS)
program.


LDS is available to two different types of students: (1) those who have recently completed an Iowa high school diploma, homeschool program, or high school equivalency diploma; or (2) those
aged 20 and older. Students must enroll at least part-time in an eligible program and must have applied for all other available grants and scholarships at the federal, state, local, and school level.
The state defines an eligible program as a field of study for a high-demand occupation, which has a minimum $14/hour starting wage threshold and has 250+ annual openings over a five-year
period or a projected 1% annual growth at a state or regional level.


When the LDS program was first created, the legislature had appropriated just over $13 million and, after the high demand of the first year, the legislature increased the appropriation to about
$23 million. This appropriation has remained consistent since 2019 with no major issues in program spending or operation until last spring. In late April 2023, Community Colleges for Iowa
was notified that LDS would be vastly overspent, prompting Iowa College Aid to suggest moving the application deadline from August 1st to May 1st, a date that was quickly approaching.
Iowa’s community colleges worked diligently to respond, wanting to ensure that students were being appropriately prepared and protected. Working with the Governor’s office and Iowa College
Aid, we agreed to set an income cap based on the expected family contribution (EFC) set forth in the FAFSA. They proposed to set the cap at $20,000 EFC, which is about $100,000 in family
income.


This change worked as a stopgap that the LDS funding faced at the time, it is not a long-term solution and it has already faces challenges one year into the change. The program is projected
to be underspent compared to previous years, suggesting that the income cap needs to be raised to aid more students. However, with the creation of a new FAFSA and a new family income
calculation called the Student Aid Index (SAI), there seems to be no efficient way to calculate what that income cap should be.
This year the Governor has proposed a new bill, Senate Study Bill 3143, which deals directly with LDS in its sixth division. First, the bill would expand the eligible programs to include a program of
study or an academic major that is jointly approved by College Student Aid Commission (CSAC) and Iowa Workforce Development (IWD) that leads to a credential aligned with at least 1 of 10
priority in-demand fields designated by the workforce development board’s ruling. Second, the income cap would remain at $20,000 EFC. Third, CSAC and IWD would determine the annual
amount of LDS based on the type of eligible programs that eligible students are participating in.

Lastly, CSAC would be authorized to reduce scholarship awards based on the number of students in each type of program.

Most of these changes wouldn’t go into effect until CSAC and IWD enact rules on behalf of the bill. While the proposed bill does address the importance of students receiving funding for both years of their study instead of allowing for a disruption from year one to year two, the other proposed changes could make that point moot by reducing the number of eligible students and programs, making it more difficult to serve students at the scale that has been successful.


At our Community College Day on the Hill this year, to be held February 27th from 7:30 am to 12:00 pm, each of Iowa’s 15 community college will showcase an LDS program with a LDS student at
their booth to share the impact LDS has had on their students, school, and community. Legislators will be encouraged to hear about the successes of LDS and reconsider making any
additional big changes at this time.


We invite our network, partners, and those who are passionate about accessible, excellent higher education to join us. More information about Community Colleges for Iowa’s 2024 Day on the Hill can be found here.

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