As part of the Governor's top-to-bottom review of state government, TSAC is seeking to use existing resources to fund grants for students with the greatest need. Establishing an endowment for need-based aid will allow the state to reach a larger number of underserved students who desire to earn a postsecondary credential at our public two-year institutions. The Governor understands that cost can play a large role in limiting access to postsecondary education, so this endowment is being established to address that need.
What is the TSAC endowment?
- The TSAC endowment will be a fund established for the purpose of providing need-based grants to Tennessee citizens seeking a certificate or associate's degree from a public two-year postsecondary institution.
- Funds for the grants will be made available through the accrued interest from the principal of the endowment and from any other appropriations that may be made.
- The corpus of the endowment will not be expended and any appropriations or matching funds made available for the program may also be placed into the endowment.
From where will funding for the proposed endowment come?
- All student loan guaranty agencies are required by the U.S. Department of Education to maintain an operating fund for use in administering the Federal Family Education Loan Program (FFELP). This fund is supported by various fees in the loan program.
- Some of the revenues deposited in the operating fund are used for specific program functions, but uncommitted revenues may be used for student financial aid related activities as selected by the guaranty agency.
- A portion of Tennessee's operating fund balance will be used to endow this need-based grant program.
Why are we establishing a scholarship endowment?
- Tennessee's primary need-based financial aid program currently serves less than 25% of the eligible students who apply.
- The Governor has set the goal of increasing the percentage of Tennesseans with a postsecondary credential from 32% to 55% by 2025. The state cannot reach this goal without helping to remove financial barriers for its low-income students.
- An endowment established for need-based aid will ensure a recurring source of funds for a grant program and help Tennessee achieve its goal for college attainment.
How will the state administer the scholarship endowment?
- TSAC will work with the Tennessee Department of Treasury in establishing the best investment option for the endowment (e.g., Chairs of Excellence, state pooled investment fund, mid-range investment fund, separate/dedicated investment fund, etc.).
- TSAC will work in conjunction with other higher education organizations to develop program rules and payment methodologies.
- Grant payments will be made directly to the postsecondary institutions on behalf of grant recipients in the same manner as other TSAC-administered grant and scholarship programs.
- TSAC will regularly perform audit reviews at receiving institutions for program compliance.