The additional funding was prompted by a report released two years ago by UNC-system officials stating that the financial need of North Carolina residents was not being met.
Prior to 1999, financial aid was provided by the federal government and funds generated by the universities themselves.
The UNC-system Board of Governors estimated that the needed funds would total $31 million annually.
Although the money allotted to the system by the N.C. General Assembly is less than what was asked for, system officials said they are pleased with the amount.
Gary Barnes, UNC-system vice president for program assessment and public service, said the allotment is promising because the system has only been requesting the funds for the past two years.
"We're delighted to have (the increase in funds), but it's not as much as we originally asked for," he said.
Joni Worthington, UNC-system vice president for communications, said the increase was an indication that the legislature is dedicated to making sure all students can attend system schools.
"The money will not cover the documented need, but the increase shows the General Assembly is committed to building a pool of funding," she said.
Barnes stressed the need for these funds from the state to keep the university accessible to low-income students.
"Tuition and fees may be low, but they are rising, and even with these levels, students have additional costs," he said. "Low tuition helps too, but it doesn't assure financial access for low-income students."
Steve Brooks, executive director of the State Education Assistance Agency, said he hopes the General Assembly will allot enough funding to cover more than first and second-year students in the future.
But Brooks said he recognizes the program's limitations because it is a young and growing program. "I thought it was remarkable, and I am gratified that the state government, with such budget problems, gave us this much."
Worthington said that although the allotted money will not be enough to meet the needs of all students, it is being carefully distributed to ensure the proper students receive it. She said, "Given that (the money) won't meet the need of all students, the money is fully leveraged and it goes to the very neediest (students)."
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