Higher education law provides funding boost to Fostering Independence Grants, fighting fraud

The higher education supplemental policy and finance law affects funding and policies for the Office of Higher Education, Minnesota State, University of Minnesota, and other postsecondary institutions in the state.

Sponsored by Rep. Dan Wolgamott (DFL-St. Cloud) and Sen. Omar Fateh (DFL-Mpls), the law’s provisions take effect Aug. 1, 2026, except where indicated.

HF4252*/SF3943/CH116

Appropriations

Taking effect July 1, 2026, appropriations in the law are:

• $3 million to the Minnesota State system to implement an identity verification system to combat “ghost student” financial aid fraud;

• $2.7 million — $1.5 million from the General Fund and $570,000 from the Workforce Development Fund — to address a funding shortfall in the Fostering Independence Higher Education Grants program; and

• $5,000 to Bemidji State University for a grant to replant trees lost in last summer’s derecho.

Policy

The law will give the Office of Higher Education additional tools to determine and then act if a school has committed fraud. It also provides technical updates to higher education administrative procedures.

Other policy provisions will:

• authorize the Office of Higher Education to deny student aid to applicants who provide false information, refuse inspections, or have been legally found to have committed fraud regarding government funding;

• mandate that postsecondary institutions clearly inform students in writing when courses — often called developmental or remedial courses — do not earn credits toward a degree or certification;

• strengthen anti-discrimination protections for pregnant and parenting students at postsecondary institutions, including priority registration;

• prohibit Minnesota State, and request the University of Minnesota, from imposing fees or extra tuition for the maintenance of facilities primarily designated for student-athletes, such as training centers or athlete housing;

• remove outdated language on work-study grants;

• allow Minnesota State employees to take paid time off for off-site blood donations, consistent with other state employees;

• authorize Rochester Community and Technical College to enter into a lease agreement with the City of Rochester to build a recreation center; and

• require a report on medical school curriculum, in part to monitor curriculum designed by for-profit companies.

Private Career School Act

Regulatory framework will be updated for private career schools, spurred in part by the October 2025 ruling in Mox et al v. Olson, which addressed the constitutionality of the Minnesota Private Career School Act.

The lawsuit was initiated after owners of a company teaching equine massage techniques contested application of the state’s licensing and bonding requirements to their coursework.

Changes include:

• refining the legal definition of a “private career school” and removing certain exceptions to licensure requirements;

• standardizing financial reporting requirements for license applications to better reflect the scale of smaller training providers;

• providing increased flexibility for schools submitting audit information; and

• allowing the Office of Higher Education to maintain student records in some cases, while removing the requirement for schools to retain paper copies.

HF4252* / SF3943 / CH116