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AB486: Bill Text
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2025 - 2026 LEGISLATURE
LRB-0321/1
JAM:wlj
2025 ASSEMBLY BILL 486
October 9, 2025 - Introduced by Representatives
Sortwell
,
Behnke
,
Maxey
,
Mursau
and
O'Connor
. Referred to Committee on Colleges and Universities.
AB486,1,2
1
An Act
to create
36.28, 38.25 and 39.55 of the statutes;
relating to:
2
permissible financial aid reductions in higher education.
Analysis by the Legislative Reference Bureau
This bill prohibits an institution of higher education from reducing gift aid that the institution has offered to a student because the student has received a private scholarship from a Wisconsin-based entity, unless certain circumstances apply. The bill applies to University of Wisconsin System institutions, Wisconsin technical colleges, and private, nonprofit institutions that are members of the Wisconsin Association of Independent Colleges and Universities. “Gift aid” is defined in the bill to mean all financial aid that is not a loan or work-study program, including grants, scholarships, tuition waivers, and third-party payments. “Private scholarship” is defined to mean a scholarship of $5,000 or less awarded by a Wisconsin-based entity but does not include an award funded by an entity that is affiliated with the institution of higher education.
Under the bill, an institution of higher education may reduce the amount of gift aid it offers to a student athlete as a result of a private scholarship award if the reduction must be done in order to comply with the individual or team financial aid restrictions of a governing national intercollegiate athletic association. The institution of higher education may also reduce the amount of a student’s offered gift aid as a result of a private scholarship award if the student’s total gift aid from all sources exceeds the student’s financial need and if the institution first alerts the student that the student may request a reassessment of a certain metric of how the institution of higher education calculates the student’s financial need. Before reducing the amount of a student’s offered gift aid, an institution of higher education must first attempt to reduce or replace other kinds of gift aid that the student has been offered, subject to applicability and to the extent that such action is permitted by the federal Department of Education.
The bill also requires an institution of higher education to make a sincere attempt to ask the provider of a private scholarship to rescind and re-award to a student a private scholarship in a way that does not constrain how the institution applies it to the student’s cost of attendance or to ask for a private scholarship award provider to clarify the way in which a private scholarship may be used. A private scholarship provider is not required to comply with the institution’s requests.
For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:
AB486,1
1
Section
1
.
36.28 of the statutes is created to read:
AB486,2,3
2
36.28
Financial aid reduction restrictions.
(1)
Definitions.
In this
3
section:
AB486,2,4
4
(a) “Cost of attendance” has the meaning given in
20 USC 1087ll
.
AB486,2,6
5
(b) “Financial need” means a student’s cost of attendance minus the student’s
6
student aid index.
AB486,2,8
7
(c) “Gift aid” means all financial aid that is not a loan or work-study program,
8
including grants, scholarships, tuition waivers, and 3rd-party payments.
AB486,2,10
9
(d) “Institutional gift aid” means gift aid that is funded by the system, the
10
board, or an institution.
AB486,3,2
11
(e) “Private scholarship” means a scholarship of $5,000 or less awarded by a
12
Wisconsin-based entity. “Private scholarship” does not include an award funded by
13
an entity that is affiliated with the system, the board, or an institution and that
1
requests that the system, the board, or an institution provide assistance in selecting
2
recipients.
AB486,3,4
3
(f) “Student aid index” means the amount determined in accordance with
20
4
USC 1087nn
.
AB486,3,5
5
(g) “Wisconsin-based entity” means any of the following:
AB486,3,6
6
1. An entity that has its primary place of business located in this state.
AB486,3,9
7
2. A local or state branch of an entity that has its primary place of business
8
located in the United States if the local or state branch of the entity has its primary
9
place of business located in this state.
AB486,3,12
10
(2)
Financial aid reduction restrictions.
(a) An institution may reduce a
11
student’s institutional gift aid offer as a result of a private scholarship award only
12
as described in one or more of the following manners:
AB486,3,19
13
1. Subject to par. (b), if a student’s total gift aid from all sources exceeds the
14
student’s financial need, an institution may reduce the student’s institutional gift
15
aid until the student’s total gift aid no longer exceeds the student’s financial need.
16
Before an institution may reduce the student’s institutional gift aid offer under this
17
subdivision, the institution shall alert the student that the student may request the
18
institution to reassess the student’s cost of attendance figure, and the institution
19
shall reassess the student’s cost of attendance figure if requested by the student.
AB486,3,23
20
2. In addition to the reduction authorized under subd. 1., an institution may
21
further reduce a student’s institutional gift aid if the institution receives approval
22
from the Wisconsin-based entity that awarded the private scholarship that
23
triggered the reduction authorized under subd. 1.
AB486,4,3
1
3. An institution may reduce a student athlete’s institutional gift aid in order
2
to comply with a governing national intercollegiate athletic association’s individual
3
or team financial aid restrictions.
AB486,4,17
4
(b) If the award of a private scholarship causes a student’s total aid from all
5
sources to exceed the student’s financial need, an institution may reduce the
6
student’s institutional gift aid until the student’s total aid no longer exceeds the
7
student’s financial need if, before reducing the institutional gift aid, and if
8
applicable and to the extent permitted by the federal department of education, the
9
institution first attempts to correct for the excess by reducing the portion of the
10
student’s total aid associated with a loan or a work-study program or replacing
11
some or all of the student’s student aid index amount with an amount associated
12
with a loan or work-study program. If, after this attempt, the student’s total aid
13
still exceeds the student’s financial need, before the institution may reduce the
14
student’s institutional gift aid, the institution shall alert the student that the
15
student may request the institution to reassess the student’s cost of attendance
16
figure, and the institution shall reassess the student’s cost of attendance figure if
17
requested by the student.
AB486,5,3
18
(c) If a student has received a private scholarship that has been awarded to
19
the student in a manner that constrains how the institution may apply the private
20
scholarship amount to the student’s cost of attendance, the institution shall make a
21
sincere attempt to contact the private scholarship award provider and ask for the
22
private scholarship to be rescinded and re-awarded to the student in a way that
23
does not constrain how the institution applies the private scholarship to the
1
student’s cost of attendance or for the private scholarship award provider to clarify
2
the way in which the private scholarship may be used. The private scholarship
3
provider is not required to comply with the institution’s request.
AB486,5,5
4
(d) This subsection shall be implemented to the maximum extent that federal
5
law permits.
AB486,2
6
Section
2
.
38.25 of the statutes is created to read:
AB486,5,8
7
38.25
Financial aid reduction restrictions.
(1)
Definitions.
In this
8
section:
AB486,5,9
9
(a) “Cost of attendance” has the meaning given in
20 USC 1087ll
.
AB486,5,11
10
(b) “Financial need” means a student’s cost of attendance minus the student’s
11
student aid index.
AB486,5,13
12
(c) “Gift aid” means all financial aid that is not a loan or work-study program,
13
including grants, scholarships, tuition waivers, and 3rd-party payments.
AB486,5,15
14
(d) “Institutional gift aid” means gift aid that is funded by the board, a district
15
board, or a technical college.
AB486,5,20
16
(e) “Private scholarship” means a scholarship of $5,000 or less awarded by a
17
Wisconsin-based entity. “Private scholarship” does not include an award funded by
18
an entity that is affiliated with the board, a district board, or a technical college and
19
that requests that the board, a district board, or a technical college provide
20
assistance in selecting recipients.
AB486,5,22
21
(f) “Student aid index” means the amount determined in accordance with
20
22
USC 1087nn
.
AB486,5,23
23
(g) “Wisconsin-based entity” means any of the following:
AB486,6,1
1
1. An entity that has its primary place of business located in this state.
AB486,6,4
2
2. A local or state branch of an entity that has its primary place of business
3
located in the United States if the local or state branch of the entity has its primary
4
place of business located in this state.
AB486,6,7
5
(2)
Financial aid reduction restrictions.
(a) A technical college may
6
reduce a student’s institutional gift aid offer as a result of a private scholarship
7
award only as described in one or more of the following manners:
AB486,6,15
8
1. Subject to par. (b), if a student’s total gift aid from all sources exceeds the
9
student’s financial need, a technical college may reduce the student’s institutional
10
gift aid until the student’s total gift aid no longer exceeds the student’s financial
11
need. Before a technical college may reduce the student’s institutional gift aid offer
12
under this subdivision, the technical college shall alert the student that the student
13
may request the technical college to reassess the student’s cost of attendance figure,
14
and the technical college shall reassess the student’s cost of attendance figure if
15
requested by the student.
AB486,6,19
16
2. In addition to the reduction authorized under subd. 1., a technical college
17
may further reduce a student’s institutional gift aid if the technical college receives
18
approval from the Wisconsin-based entity that awarded the private scholarship
19
that triggered the reduction authorized under subd. 1.
AB486,6,22
20
3. A technical college may reduce a student athlete’s institutional gift aid in
21
order to comply with a governing national intercollegiate athletic association’s
22
individual or team financial aid restrictions.
AB486,7,13
23
(b) If the award of a private scholarship causes a student’s total aid from all
1
sources to exceed the student’s financial need, a technical college may reduce the
2
student’s institutional gift aid until the student’s total aid no longer exceeds the
3
student’s financial need if, before reducing the institutional gift aid, and if
4
applicable and to the extent permitted by the federal department of education, the
5
technical college first attempts to correct for the excess by reducing the portion of
6
the student’s total aid associated with a loan or a work-study program or replacing
7
some or all of the student’s student aid index amount with an amount associated
8
with a loan or work-study program. If, after this attempt, the student’s total aid
9
still exceeds the student’s financial need, before the technical college may reduce
10
the student’s institutional gift aid, the technical college shall alert the student that
11
the student may request the technical college to reassess the student’s cost of
12
attendance figure, and the technical college shall reassess the student’s cost of
13
attendance figure if requested by the student.
AB486,7,23
14
(c) If a student has received a private scholarship that has been awarded to
15
the student in a manner that constrains how the technical college may apply the
16
private scholarship amount to the student’s cost of attendance, the technical college
17
shall make a sincere attempt to contact the private scholarship award provider and
18
ask for the private scholarship to be rescinded and re-awarded to the student in a
19
way that does not constrain how the technical college applies the private
20
scholarship to the student’s cost of attendance or for the private scholarship award
21
provider to clarify the way in which the private scholarship may be used. The
22
private scholarship provider is not required to comply with the technical college’s
23
request.
AB486,8,2
1
(d) This subsection shall be implemented to the maximum extent that federal
2
law permits.
AB486,3
3
Section
3
.
39.55 of the statutes is created to read:
AB486,8,5
4
39.55
Financial aid reduction restrictions.
(1)
Definitions.
In this
5
section:
AB486,8,6
6
(a) “Cost of attendance” has the meaning given in
20 USC 1087ll
.
AB486,8,11
7
(b) “External scholarship” means a scholarship of $5,000 or less awarded by a
8
Wisconsin-based entity. “External scholarship” does not include an award funded
9
by an entity that is affiliated with a private higher education institution and that
10
requests that the private higher education institution provide assistance in
11
selecting recipients.
AB486,8,13
12
(c) “Financial need” means a student’s cost of attendance minus the student’s
13
student aid index.
AB486,8,15
14
(d) “Gift aid” means all financial aid that is not a loan or work-study program,
15
including grants, scholarships, tuition waivers, and 3rd-party payments.
AB486,8,17
16
(e) “Institutional gift aid” means gift aid that is funded by a private higher
17
education institution.
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