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SF 2528

North Star Promise scholarships recipients in-state residency and work requirement imposition provision

2025-2026 Regular Session Introduced by Rob Farnsworth and 2 co-sponsors

North Star Promise scholarship recipients must reside and work in Minnesota for three years after completing their program, or the award converts to a loan.

Referred to Higher Education
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Bill Summary · SF 2528

Summary of SF 2528 (2025-2026) – North Star Promise Scholarships: In-State Residency and Work Requirement

Department: Minnesota Legislature | 94th Legislature (2025-2026)

Purpose and Intent

SF 2528 adds a residency and employment obligation to the North Star Promise scholarship program. The bill requires recipients to reside and work in Minnesota for a three-year period after completing their degree or credential program, with provisions for waivers, deferments, and eventual conversion of outstanding scholarships to loans if the requirements are not met. The aim is to promote local workforce retention and in-state economic contribution from scholarship recipients.

Key Provisions and Changes

Eligibility for North Star Promise Scholarships (existing framework, amended)

  • Maintains existing eligibility criteria (as revised in the bill):
    • FAFSA or state aid application completed
    • Family adjusted gross income below $80,000
    • High school graduate or equivalent; or 17+ and eligible for admission
    • No baccalaureate degree at the time of award
    • Enrolled in at least one credit per term (fall/spring/summer)
    • Enrolled in a program leading to degree, diploma, or certificate
    • Not in default on federal/state student loans
    • Not more than 30 days in arrears on child support (or in compliance with a payment agreement)
    • (New) Prior to the changes, requirement for satisfactory academic progress remains
    • (New) Additional clause: the applicant must sign a contract to convert total scholarship to a student loan if the residency employment requirement is not fulfilled (see Section 2a)

Residency and Employment Requirement (new)

  • Section 2a introduces a binding residency and employment requirement:
    • Recipients must reside and be employed in Minnesota for a three-year term, beginning within six months after completing the degree or credential program funded by the scholarship.
    • If the requirement is not fulfilled, the total scholarship award must be converted to a student loan, with principal plus interest collected by the Commissioner (interest rate per Minnesota’s loan collection provisions, §270C.40).

Waivers, Deferments, and Exceptions

  • Waivers (Section 2a, subsection b):
    • May waive the residency/employment requirement if, within six years of the initial award:
    • The degree/credential was not completed
    • The recipient has not earned a baccalaureate degree
    • The recipient is no longer enrolled in any postsecondary institution
  • Deferments (Section 2a, subsection c):
    • May defer for:
    • Attendance in a postgraduate education program (enrolled at least half-time)
    • Full-time volunteer service (e.g., Peace Corps, AmeriCorps or similar)
    • Extreme hardship circumstances
  • Ineligibility remains subject to the residency/employment requirement for six years from the initial award, unless waived or deferred (Section 2a, subsection d)

One-Time Obligation Across Multiple Degrees

  • If a recipient earns more than one degree/credential with North Star Promise awards, the residency/employment requirement covers all programs with a single obligation (Section 2a, subsection e)
  • The obligation terminates upon death or total permanent disability

Effective Date

  • The act becomes effective the day after final enactment
  • Applies to scholarship awards beginning in the fall term of the 2026-2027 academic year (i.e., first affected cohort)

Who Would Be Affected

  • Eligible students receiving North Star Promise scholarships starting in 2026-2027
  • Recipients who complete a degree/credential funded by the scholarship
  • Potentially, students who would have otherwise pursued education outside Minnesota or who relocate after degree completion

Procedural and Timeline Aspects

  • Effective date: day after enactment
  • Applies to awards for the 2026-2027 academic year onward
  • Post-award enforcement: conversion to loans if residency/employment not met
  • Waiver/deferment processes are provided, with criteria and six-year windows for waivers

Potential Impacts and Considerations

  • Financial: Creates a loan conversion mechanism if the residency/work requirement is unmet; affects net cost to recipients
  • Workforce: Encourages Minnesota residency and employment, potentially strengthening regional talent retention
  • Access: Eligibility criteria remain relatively conservative (income cap, progress requirements), so the impact on low- to moderate-income students is preserved, with added obligations
  • Administrative: Increased administration for tracking residency/employment, waivers, and deferments

If you’d like, I can provide a concise one-page briefing or a side-by-side comparison with the current law.

Compiled from official sources — confirm details with the bill’s official record.

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