Washington state’s two largest private-sector employers, Microsoft and Boeing, will each be giving $25 million over the next five years to help low- and middle-income students pay for college. With matching contributions from the state, the plan is to raise $100 million for scholarships and create a billion-dollar endowment by 2020.

The companies announced the contributions today in conjunction with Washington Gov. Chris Gregoire, who enacted legislation to create the new Washington Opportunity Scholarship program. Microsoft’s general counsel, Brad Smith, explains the background in this post. An excerpt …

Historically, the higher education system for public colleges and universities has relied on two sources of money – direct state funding and student tuition bills. A two-legged stool is never sturdy, and that’s the problem for public higher education funding. As the recession and subsequent historic declines in state revenues eroded direct state financial support for our public universities, rising tuition levels have become inescapable. Indeed, the Higher Education Funding Task Force recommended that the Washington legislature give our six four-year public institutions more flexibility to set their own tuition levels, and today Gov. Gregoire signed into law a key provision that enables this step.

However, even sizable tuition increases can’t make up for all the cuts in public funding. Potentially even more disconcerting, higher tuition rates put at risk the ability of talented students from low- and middle-income groups to go to college. All of this comes at a time when the state needs to produce more college graduates in high-demand fields to enable local companies to fill jobs and help bring down the unemployment rate.

This combination of necessities has led to the new and innovative steps signed into law today. In short, we need to create a third leg to the stool for funding public higher education. This leg consists of a new endowment for financial aid for local low- and middle-income students who want to attend a college or university in our state. It is based on support from a new partnership between the public and private sectors. As an endowment, it starts to provide the financial sustainability that our current funding system so clearly is missing.

Microsoft has faced criticism for recording a large portion of its software licensing royalties in Nevada, reducing its tax obligations in its home state. Critics argue that the additional tax revenue would provide hundreds of millions in additional funding for the state, potentially helping the educational system.

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