EAST LANSING, Mich. — Michigan State University will direct nearly $8 million in federal stimulus funds meant to cover a shortfall in state appropriations this year toward assisting more than 8,000 MSU students who lost their own state support.

Michigan lawmakers this year failed to renew funding for the Michigan Promise Scholarship program, which provided up to $120 million in grants for approximately 100,000 Michigan college students. That program awarded $1,000 to freshmen and sophomores, and this year was to have started granting $2,000 to juniors.

“Michigan State is committed to keeping higher education financially accessible to as many Michigan students and their families as we can,” said MSU President Lou Anna K. Simon. “It is part of our bedrock mission, and a responsibility for which we are going to great lengths to fulfill through extraordinary increases in financial aid, painful operating budget reductions and forward-thinking academic restructuring.”

The MSU Board of Trustees June 19 established the university’s 2009-10 general fund budget at $283.9 million, anticipating operating cuts reflecting a 3 percent reduction in state support as well as a tuition increase held to 5.2 percent. Federal stimulus funds made up all but 0.4 percent of the baseline appropriations, but trustees agreed not to allocate those one-time funds to university operations or capital expenditures. The board instead authorized Simon to use any general fund federal stimulus proceeds to mitigate students’ tuition increase and loss of state financial aid.

MSU will tap stimulus funding to help cover the loss of Michigan Promise assistance for 2009-10 only, Simon explained. The new MSU Promise Replacement Awards program will grant $1,000 to more than 2,000 freshman and sophomore students with the greatest need. The remaining 6,000-plus qualifying underclassmen will receive one-time grants of $500.

Stimulus funds also will be put toward a reduction of spring semester tuition by $5 per credit hour, also on a one-time basis, for all resident undergraduate students.

Any remaining stimulus funds will help replenish MSU’s Adverse Economic Circumstances Fund, developed last year to assist students whose families suffered severe financial setbacks in the economic downturn.

The university has not finalized contingency plans for loss of the Michigan Promise Scholarship beyond the current year.

Several other state student financial aid programs lost funding this year, MSU Financial Aid Director Rick Shipman said, including the Michigan Work Study Program, which last year distributed $433,000 to 395 MSU students. Also unfunded this year are the Michigan Educational Opportunity Grant, from which 733 students last year received a total of  $137,000; the Michigan Nursing Scholarship, funding 65 students with $214,000 in awards last year; and the Adult Part Time Grant, which last year distributed $63,000 to 50 MSU students.

The Michigan Competitive Scholarship, which last year awarded $5.4 million to 4,500 MSU students, this year is only partially funded by the state, Shipman added.

Loss of such financial aid, coupled with the long-term downward trend in state support for higher education in Michigan, has prompted the university to respond with other new programs.

Michigan State Oct. 23rd announced its Spartan Scholarship Challenge, using an anonymous $7 million gift to augment new contributions on a 50 percent match basis to bolster financial aid in this period of economic hardship for students and families.

Other recently created MSU scholarship programs include:

• The Disabled Veterans Assistance Program, which covers all education-related costs, including tuition, fees, room and board, books and other incidentals for disabled vets.
  
• The MSU Assistance Program, targeting students whose family income exceeds the criteria for federal awards, such as Pell grants, but still demonstrate a substantial need.
  
• The Spartan Advantage Program, which ensures students have tuition, fees, room and board and books covered with a combination of work study and gift aid.

Last year, MSU disbursed more than $530 million in financial aid to more than 37,000 students, or nearly 73 percent of the student population.

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