New Mexico to establish $959M higher ed fund supporting free tuition

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Dive Brief:

• New Mexico Gov. Michelle Lujan Grisham signed a bill last week that establishes a $959 million fund to support free college tuition for state residents.
• The trust fund will be the largest dedicated to higher education by a state, the governor’s office said in a March 8 announcement. Just seven other states, including Tennessee, New Jersey and Alaska, have trust funds for higher education.
• New Mexico’s fund will support two programs: the Lottery Scholarship, which provides free tuition for recent high school graduates, and the Opportunity Scholarship, which covers students who attend New Mexico public colleges later in life. Nearly $48 million will be distributed from the fund in fiscal 2025.

Dive Insight:

The new trust fund is just one of several actions that New Mexico lawmakers have taken in recent years to beef up the state’s free college programs.

The Lottery Scholarship has existed for nearly three decades, and it supports around 10,000 students each year, according to the governor’s office. However, economic hardship led the state in 2016 to reduce the program to only covering an average of 60% of students’ tuition costs.

In 2021, Lujan Grisham, a Democrat, used federal funding to return that coverage to 100% of tuition costs. The next year, the state launched the Opportunity Scholarship to support students who either didn’t attend college immediately after high school graduation or who left before they completed their credentials.

Unlike many other free college programs, the Opportunity Scholarship is open to older adults and part-time students.

Lujan Grisham has credited the Opportunity Scholarship with boosting college enrollment across the state. At the same time, the amount the state spends on college financial aid has increased dramatically over the past few years, jumping from under $90 million in fiscal 2022 to around $210 million in fiscal 2024, according to a recent legislative analysis.

New Mexico’s general fund revenue has increased in recent years, and the state has taken steps to boost distributions to reserves, according to a recent government release. Its higher education trust will be funded by money from its tax stabilization reserve.

Before lawmakers approved the new fund, however, they hadn’t allocated enough to the Opportunity Scholarship to fully support it, a separate analysis found. The $146 million appropriation for fiscal 2024 fell about $10.6 million lower than the program’s estimated cost.

“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,” Lujan Grisham said in signing the bill on March 5.