Indiana’s Commission for Higher Education voted Thursday to keep Frank O’Bannon scholarship awards flat for the 2026-27 academic year, holding the state-funded financial aid program at about $168 million annually.
The decision means roughly 37,000 Hoosier college students who receive the need-based grant each year will see the same maximum and minimum award amounts as in the current cycle.
Commission staff said the flat-line was driven by uncertainty around federal student aid changes and the need to preserve the program’s appropriation without generating unplanned spending overages.
“We’re prioritizing predictability so students can count on the award and we don’t exceed the appropriation,” said Cody Robison, CHE’s deputy chief financial officer.
Changes to scholarship spending
The flat schedule follows years of funding shifts.
In 2022, the commission raised award amounts by 35% to restore pre-Great Recession levels after years of underspending. But subsequent federal changes to the Free Application for Federal Student Aid, FAFSA, and the Student Aid Index unexpectedly drove up eligibility and spending.
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Robison said that forced the commission to trim award levels in 2024 to stay within the program’s state appropriation.
In the latest state budget approved by the General Assembly earlier this year, about $77.5 million in accumulated reserves from prior years was reverted to the state’s general fund, leaving the program without a carryover cushion going forward.
State funding for higher education also took a roughly 5% hit in the latest budget cycle, triggered by a grim revenue forecast that projected about $2 billion less in revenues over the biennium. Across the board, state agencies were hit with similar funding reductions.
Previously, CHE was spending about $130 million per year out of the roughly $168 million appropriation for the Frank O’Bannon Grant, with the remainder accumulating in reserves.
But in 2024, the number of Indiana students who qualified for state financial aid jumped after significant changes were made to the federal formula that determines aid eligibility. Commission members kept the awards at the same amount, leading to an unexpected increase to Indiana’s projected spend for the 2025 fiscal year.
That forced CHE to dip into its reserves to cover the inflated costs. Commission staff reported $173 million in Frank O’Bannon awards dispersed in the 2024 fiscal year; $215 million the 2025 fiscal year; and $160 million in the current fiscal year.
Projected scholarship disbursements in the 2027 fiscal year are currently estimated at $157 million. Robison told commissioners that CHE is projecting about 37,000 awards to be issued for 2026-27 academic year, the same as in the current year.
Unused Frank O’Bannon dollars are no longer allowed to rollover into future budget cycles, but any remaining balance at the year’s end can now be transferred to the 21st Century Scholars or Adult Student Grant funds.
Robison said the goal moving forward is to spend “as close as possible” to the Frank O’Bannon program’s full allocation, however.
“We’ll aim to use the full appropriation while not building a hidden reserve,” Robison said.
Award amounts to stay the same
Created in 1969 and later renamed for former Gov. Frank O’Bannon, the grant is Indiana’s primary need-based scholarship for in-state students attending in-state colleges.
It combines two long-running programs: the Higher Education Award, which covers public and proprietary institutions, and the Freedom of Choice Grant for students at private colleges.
Students must be full-time Indiana residents, maintain satisfactory academic progress, and file the FAFSA by April 15 each year to qualify. Those completing at least 24 credit hours earn a full-time award; 30 hours or more qualifies them for the higher “on-time” award.
Together, the Frank O’Bannon programs account for more than 40% of all state-funded student aid, according to the commission.
Award amounts under the 2025-26 schedule ranged widely depending on institution type and student need.
For students at public four-year institutions with the highest demonstrated need and at least 30 credit hours completed, the “on-time” award currently tops at $5,300. Students in their first award year also receive the on-time award amount.
For similar students at private colleges, the top scholarship levels reach $10,600, according to CHE.
At Ivy Tech Community College and smaller proprietary institutions, the top award for the current academic year is about $4,050.
Students receiving the “full-time award” — for completing 24 to 29 credits, rather than 30 or more — the ceiling for the public-institution award falls to about $3,850, while the private institution award is about $7,700 for the 2025-26 schedule.
With the award amounts held flat for the upcoming 2026-27 school year, eligible students will continue to receive financial support in roughly that range, assuming their institution type and credit-completion category remain unchanged.
Commissioner pushes for a stronger message to students
Katie Jenner, who presided Thursday over her first full CHE meeting as both Indiana’s Secretary of Education and the newly-selected CHE commissioner, said the agency will also publish the grant’s funding methodology publicly for the first time in January. The plan, she said, is to invite input from colleges, financial-aid groups and other stakeholders.
“When we put something out transparently, it always ends up better,” Jenner said, adding that the goal is to “make sure we’re spending that money as prudently as possible.”
“We’ll be very transparent about what’s working, what’s not, and make sure every dollar supports the students who need it most,” she continued.
Robison noted that — alongside the 21st Century Scholars Program — the Frank O’Bannon Grant remains a key pillar of the state’s goal to make higher education “accessible and affordable” to all Hoosiers.
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Still, Commissioner Dennis Bland said he’d like to see the program’s communications stress that the scholarship represents “an investment,” not a “handout.” He emphasized the “human” impact of the grant and the importance of students understanding the state’s investment in them.
“When people understand that someone has invested in their life and future, they’re more inclined to steward that investment,” Bland said, suggesting the commission or colleges could send students a message reflecting that theme.
He further linked the scholarship to student motivation and retention.
“Investments are being made in your life and the future of your family so that you can grow, develop your skills, return contribution to your family, return contribution to the community,” Bland added. “You’re an outstanding citizen for this state — for the nation. … These are really investments.”
The approved schedule now goes to the State Budget Committee for review in December, as required by state law. After that, the commission will communicate the final award amounts to Indiana’s colleges and universities so financial-aid packages can be prepared early next year.
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