As the state’s official student financial aid agency for more than 50 years, Iowa College Aid is limited in the type of external funding it can pursue toward its mission to “make college possible for all Iowans.”
“There are major grants out there that don’t go to government agencies,” said Elizabeth Keest Sedrel, a spokeswoman for Iowa College Aid — initially created in 1963 by lawmakers as the Iowa College Student Aid Commission.
“They might be very much in line with what we do, in terms of improving college access to college,” she said. “But sometimes they say that they will only go to a 501(c) (3)” nonprofit.
With state aid for public universities dropping, tuition rates on an unrelenting incline and demographic shifts driving economic need among college students — compounded even more by COVID-19 hits and a strapped state budget — Sedrel said external funding is as imperative now as it’s ever been.
That has her agency looking at a solution to the obstacle blocking it from accessing those pots of funding.
“There is a recommendation to allow Iowa College Aid to organize a nonprofit corporation,” Sedrel said. “This would not replace our agency. It would be a nonprofit arm that would work in conjunction with our agency.”
The recommendation will come in a bill the agency plans to propose this legislative session to form an Iowa College Aid 501(c) (3), exempt from taxation — similar to a proposal from the 2020 legislative session.
“The corporation must be organized for the purpose of receiving and disbursing funds from public or private sources to be used to provide Iowans with educational financial assistance and services under programs administered by the commission,” according to last year’s proposal.
Although that bill passed the Iowa House unanimously, Sedrel said it didn’t come up in the Iowa Senate before the legislature adjourned.
If approved this year, according to Sedrel, a nonprofit arm would allow Iowa College Aid to apply for funding from organizations like the Bradley, Hearst, Kresge, Gates and Spencer foundations that award grants only to nonprofits.
“Some of these organizations share Iowa College Aid’s mission of increasing college access and success, but as a government agency, we are not eligible for their funding,” she said.
Iowa College Aid — which for fiscal 2022 is seeking a status quo $79.95 million appropriation from the Legislature — would provide staff assistance and administrative support for the nonprofit, which would not take state funds.
The two entities also would have overlap on their boards.
“We see the nonprofit arm as a win for everyone,” Sedrel said. “Iowa College Aid could continue and potentially expand our college access and success programs without asking for state appropriations.”
Iowa has set a goal of getting 70 percent of its workforce postsecondary credentials by 2025 — a bar set by research showing future labor demands in the state.
Financial aid could play a key role in making that happen. Shifting demographics in Iowa forecast Asian, Black, Hispanic and multiracial populations increasing while white student numbers dip.
“These changing demographics could affect Iowa’s college-going rates as student groups with lower college-going rates increase in proportion while white students decrease,” according to Iowa College Aid.
A recent legislative publication reported average debt for students graduating from non-public institutions in Iowa is $34,199, For graduates of Iowa’s public universities, it’s $25,623.
Annual student expenses, according to that report, average $41,947 for non-public institutions and $19,588 for public universities.
Sen. Joe Bolkcom, D-Iowa City, told The Gazette he sees no downside to approving an Iowa College Aid nonprofit.
“We should absolutely do that. … I would assume that will pass unanimously.”