Granholm proposes reviving Promise Scholarship as income tax credit

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Editor’s note: This headline was corrected to reflect that Granholm proposed an income tax credit.

Gov. Jennifer Granholm announced Thursday her intentions to revive the defunct Michigan Promise Scholarship as an income tax credit as part of her 2010-11 fiscal year budget proposal.

The tax credit of up to $4,000, would be offered to students who graduated from a Michigan high school, obtained a degree from a Michigan college or university and worked at least part time in the state for one year after obtaining a degree.

The Promise Scholarship offered students attending Michigan universities up to $4,000 until Granholm signed a package of budget bills in October eliminating the scholarship. The governor’s latest proposal is contingent on approval from legislators.

While introducing her proposal, Granholm said she did not want to see more cuts to education. She said reinstating the Promise as an income tax credit was the best way to include the scholarship again.

“I wanted to get Michigan’s priorities in this budget,” Granholm said.

The move also might reopen wounds still fresh from last fall’s decision to cut the scholarship.

Matt Marsden, spokesman for state Senate Majority Leader Mike Bishop, R-Rochester, said the proposal might be unpopular, at least among Republican legislators, because it likely will require raising taxes to fund the tax credit.

He said Bishop and his staff likely will review the tax credit proposal in full before taking a formal stance on the matter.

“The way it’s laid out now, you’re asking for people to pay higher taxes,” Marsden said.

“I’m not sure that there’s going to be a whole lot of support.”

Terry Stanton, spokesman for the Michigan Department of Treasury, said if passed in its current form, the tax credit would be claimed on income tax forms the same as any other tax credit. He said eligibility criteria would be the same as it was when the Promise was a scholarship.

Stanton also said students who did not receive all of the funding they were entitled to under the Promise Scholarship would be eligible to apply for the remainder of that money as a tax credit.

MSU Trustee Faylene Owen said she is cautiously optimistic that the situation will improve by offering the money as a tax credit.

“I recognize that this is just the governor’s proposal,” Owen said. “We still need positive action by the (state) Senate and the (state) House, which I am hopeful we will see.”

Val Meyers, associate director of financial aid at MSU, said if it ends up working like federal income tax credits do, students will receive a form from financial aid’s billing office that would lay out a student’s paid expenses while attending school.

Staff writers Marissa Cumbers and Ellen Mitchell contributed to this report.

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