The Alaska Commission on Postsecondary Education warned lawmakers Tuesday that the state's scholarship program will likely run short of money in several years through 2029.

The projected shortfalls stem from more students using the Alaska Performance Scholarship after the Legislature expanded who can qualify last year through House Bill 148. Any cuts to scholarship funding would also reduce need-based grants because the programs share the same funding pot, Executive Director Carrie Thomas said.

"Our APS funding projections are through 2029, where we do have various spaces here where the funding will, or the projections will exceed the funding available," Thomas told lawmakers during a briefing session.

Alaska's 2025 graduates used the scholarship at record levels. More students received the merit-based award than ever before. The scholarship provides up to $28,000 across eight full-time semesters.

The commission's budget request for fiscal year 2027 reflects available money from the Higher Education Investment Fund. That fund allocates 7 percent of its annual balance to scholarships and grants. Under current rules, two-thirds of that money supports merit-based scholarships. One-third funds need-based grants through the Alaska Education Grant program.

"Any changes to APS funding levels will directly impact the AEG funding amount available to keep that two-thirds, one-third," Thomas said. She was referring to the Alaska Education Grant program that serves students with financial need.

House Bill 148 changed the Alaska Performance Scholarship rules to let more students qualify. The timing matches Alaska's first-ever increase in federal financial aid applications, Thomas noted. Alaska historically ranks last or next-to-last nationally in students completing the Free Application for Federal Student Aid.

The commission operates independently from state general funds. The Alaska Student Loan Corporation supports it and offers education loans at lower interest rates than for-profit lenders.