Mighican: A Promise or a Tax Break?

State merit scholarships, generous grants to high-achieving graduates of public high schools who attend state universities, were very popular in the last ten years. West Virginia had the PROMISE Scholarship. Georgia had its HOPE Scholarship. And Michigan had the Promise Scholarship.

Part of the goal of all these state scholarships was to counteract “brain drain” and try to keep bright, hard-working students in the state after graduation.

But continuing controversy over the program, and a fiscally conservative state legislature, caused Michigan to eliminate its scholarship recently. Michigan Gov. Jennifer Granholm, however, wants to keep the Michigan Promise Scholarship around, somehow. From an article by Matthew Miller in the Lansing State Journal comes news that:

Since the Promise Scholarship was eliminated last fall, Granholm has been looking for ways to resurrect it. Her most recent pitch calls for changing it from a scholarship into a refundable tax credit that would be given to college graduates if they stayed in Michigan and worked for a year after graduation.

Under the Granholm plan, instead of a scholarship to attend school, Michigan would give hardworking Michigan students a $4,000 tax credit after they’ve finished school.

Even if enacted, the tax credit is unlikely to be terribly effective. While some 43 states have programs that offer student loan repayment or tax credits to students who work in particular regions (or particular fields), most of the students interviewed for the Miller article indicated that, while the next credit would be nice, they’d move wherever they needed to get a job. That’s unlikely to be Michigan, a state with a 14.6 percent unemployment rate.

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Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer