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Legislation may simplify NC financial aid system

RALEIGH — A new plan by legislators brings the state no closer to solving a shortage of financial aid money.

But it would consolidate existing sources of aid — some of which are running out — to simplify the system.

The legislative committee recommends consolidating three need-based grants into the N.C. Access and Success Grant and eight loan programs into the N.C. Forgivable Education Loan for Service program, said Steve Brooks, executive director of the N.C. State Education Assistance Authority.

The transition will take place in 2012 if the General Assembly approves recommendations in its upcoming session.

Committee members acknowledged the need for alternative sources of funding to replace the state’s depleting escheats fund, which provided about 67 percent of the three funds to be consolidated for the 2009-10 academic year.

“That has been the 800-pound gorilla that’s been sitting in this room since the day this committee was constituted,” said Ray Rapp, D-Haywood, the committee’s vice chairman.

The consolidation would free up some money, but the savings would not be nearly enough to offset the expected deficit if the state’s escheats fund becomes unusable in 2013 as predicted, he said.

In 2009-2010, the escheats fund provided $155 million in state grant funding.

“Everything should be on the table when you’re looking at these kinds of numbers,” Rapp said.

If legislators can’t come up with a replacement for that money when the escheats fund becomes obsolete, students may have to take out more loans, Brooks said.

The two recommendations are intended to simplify the N.C. higher education system’s process for allotting financial aid, but the committee members said they are not finished perfecting the programs.

They decided to recommend deferring consolidation of the grants until 2012 to study ways to help students who would lose financial aid in the transition from one payment schedule to another.

The current proposed payment schedule is not adjusted for differences in tuition — according to this schedule, students at UNC would lose about $2.6 million in state financial aid.

“There were clear winners and losers,” Rapp said. “We wanted to work out a more equitable system.”

There are uncertainties for the upcoming year’s financial aid as well.

Students have already begun submitting requests for financial aid, and they can continue to do so past UNC’s priority deadline of March 1.

The University’s financial aid office ensures students who apply by that date will receive all the funds for which they are qualified.

But students who apply after the deadline might not be as fortunate.

The funds allotted by the legislature for the 2010-11 academic year’s financial aid ran out in August, said Elizabeth McDuffie, director of grants, training and outreach for the N.C. State Education Assistance Authority.

Students who filed a Free Application for Federal Student Aid after Aug. 20 — approximately 1,200 across the UNC system — were not considered for the UNC need-based grant program, she said.

The funds could run out again this year if state higher education officials underestimate student need.

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They will have to estimate need when asking for aid money from the state legislature for the 2011-12 academic year because neither the federal Pell Grant payment schedule nor the state’s budget has been finalized, Brooks said.

“We’re kind of stymied until we’ve got a Pell schedule,” he said.

Contact the State & National Editor at state@dailytarheel.com.

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