Indiana to hold key financial aid award at current rates

Indiana’s primary need-based college scholarship will maintain the same award schedule for the third consecutive school year, while several other popular scholarships are under review.

The Indiana Commission for Higher Education voted Thursday to freeze the Frank O’Bannon Grants award schedule at current rates for the 2027-28 school year, so as to not exhaust the $168 million in available funding.

The schedule now awaits final approval from the State Budget Committee when it meets in December.

Pressure on scholarship fund

The scholarship is Indiana’s most popular need-based financial aid award, supporting more than 35,000 students last school year.

Lawmakers have appropriated $168 million toward the scholarship each year since 2021. But changes in federal financial aid eligibility led to unexpectedly high demand for the scholarship in 2024, forcing the commission to trim the award and dip into reserves.

Then a grim financial forecast pushed lawmakers to revert the scholarship fund’s reserves to the state General Fund, further squeezing the dollars and prompting the commission to freeze what it offers students who qualify.

The scholarship can be used at public and private colleges alike, though award amounts vary by institution, credit hours and student need. The maximum grant amount is $10,600 and the minimum is $400.

Students must maintain satisfactory academic progress at their chosen college, maintain Indiana residency and file a Free Application for Federal Student Aid by April 15 each year to qualify.

Cody Robison, the commission’s chief deputy financial officer, said the agency is projected to spend $165 million on the Frank O’Bannon Grants for the 2027-28 school year — just shy of the $168 million appropriated to the fund.

Other scholarships subject to review

The commission is also expected to review completion rates and graduate outcomes for other popular financial aid programs like the Workforce Ready Grant, awarded to returning adult students pursuing short-term credentials, as it prepares for the 2027 legislative session.

Robison said the grant has produced mixed results despite its growing popularity.

Most programs participating in the Workforce Ready grant are designed to be completed within six to 12 months, yet only 52% of recipients finished a degree or credential within three years, Robison said.

The commission restricted new applications this fall as demand for the grant outpaces available funding.

A similar problem is happening with the state’s scholarship for children of disabled veterans and public safety officers. The state received $44 million in claims for 6,000 students receiving the award last year, far exceeding the $32 million in available funding.

Robison said 60% of these students complete their chosen degree within six years.

“We want to be thinking about the ROI that students are getting from the program and making sure that our recommendations are really informed by that,” he said.