HF4672

Purpose

This bill would change how North Star Promise scholarships work by adding a requirement that recipients live in Minnesota and work in Minnesota for a period after completing their degree or credential. It also tightens which programs qualify and ties scholarship eligibility to in-demand industries and occupations, based on labor market data.

Main provisions and goals

• Restrict North Star Promise eligibility to students pursuing programs that lead to employment in industries and occupations that are in demand in Minnesota.
• Require scholarship recipients to reside in Minnesota and be employed in Minnesota for a five-year period starting within six months of completing the degree or credential.
• Convert any scholarship funds not fulfilled as required into a student loan, with interest, if the recipient fails to meet the residency and employment obligation.
• Create a contract requirement: recipients sign a contract agreeing to convert total scholarship awards to a loan if they do not comply with the residency/work rule.
• Allow waivers or deferrals of the residency/work requirement under specific circumstances (e.g., not completing the program, not earning a degree, not enrolled in any postsecondary institution; attending a postgraduate program with partial enrollment; extreme hardship; or performing full-time volunteer service like Peace Corps/AmeriCorps).
• Require ongoing updates to which programs count as eligible and which industries/occupations are in demand, based on labor market data, reviewed at least every three years.

In-demand programs and labor market alignment

• Eligible programs of study are limited to those that lead to employment in in-demand industries and occupations.
• The Office of Higher Education will determine in-demand sectors using employment data from the Department of Employment and Economic Development (DEED).
• The list of in-demand industries/occupations and approved programs will be reviewed and updated at least every three years to stay aligned with current labor market data.

Residency and employment obligation details

• A five-year residency and employment term in Minnesota is required, beginning within six months after completion of the degree or credential.
• If a recipient fails to meet the residency and employment requirement, the total scholarship amount must be converted to a student loan, plus interest set by statute.
• The commissioner may waive the residency/employment requirement for specific cases (e.g., after six years if the recipient still has not completed the degree, or is no longer enrolled in any postsecondary institution, or has not earned a baccalaureate degree).
• The commissioner may defer the requirement to allow attendance in a postgraduate program (with at least half-time enrollment) or to perform full-time volunteer service (e.g., Peace Corps/AmeriCorps) or for extreme hardship.
• If a recipient becomes ineligible for a scholarship or has it terminated, they still must meet the residency/work requirement within six years of the initial award unless waived or deferred.
• If a student earns multiple degrees/credentials with North Star Promise awards, they only need to meet the residency/work requirement once.
• The residency and employment obligation ends if the recipient dies or experiences a permanent and total disability.

Financial terms and consequences

• The total scholarship award can be converted into a student loan if the recipient does not fulfill the residency and employment requirement.
• The loan would accrue interest at a rate established by statute (per the referenced section).
• A waiver or deferment can alter when or if the requirement must be fulfilled, but in general the obligation remains unless explicitly waived/deferred.

Reporting and oversight

• The Commissioner of Higher Education must provide a preliminary report by September 1, 2025, and annual reports starting February 15, 2026.
• Reports must cover: the status of the scholarship fund, the list of currently eligible programs, and participation data by institution.
• Specific data points include: number of eligible students receiving scholarships, average and total awards, demographic data, total number of enrolled students, retention rates, graduation numbers, semesters attended, and which eligible programs students were enrolled in.

Significant changes to existing law

• Adds subdivision 2a to define eligible programs of study (must lead to in-demand employment) and to require ongoing alignment with labor market data.
• Adds subdivision 2b to establish a Minnesota residency and employment requirement for North Star Promise recipients, with waivers/deferrals and a loan-conversion mechanism if not complied with.
• Amends subdivision 10 to require annual reporting and a more detailed program and participant data collection.
• Overall, ties North Star Promise scholarships more tightly to Minnesota workforce needs, adds a prerequisite to reside and work in Minnesota after graduation, and introduces liquidity risk for scholars who do not meet the new obligations.

Practical takeaways

• Students seeking a North Star Promise scholarship would need to plan for in-state residency and Minnesota employment for five years after finishing their program.
• Only programs connected to in-demand Minnesota industries would qualify for new scholarships.
• There are enforcement mechanisms (conversion to a loan) and potential waivers/deferrals for particular circumstances.
• The state would monitor and publicly report program eligibility, recipients, and outcomes on a regular basis.

Relevant Terms - North Star Promise scholarship - in-demand industries and occupations - Minnesota residency and employment requirement - five-year term - reside and be employed in Minnesota - contract to convert to student loan - waiver and deferment - extreme hardship - Peace Corps and AmeriCorps service - postsecondary enrollment - Office of Higher Education - Department of Employment and Economic Development (DEED) - eligible programs of study - labor market data - preliminary report and annual report - FAFSA / state aid eligibility thresholds - family adjusted gross income limit ($80,000) - loan interest rate (section 270C.40.3)