N.C. student aid in ?nancial bind

A major funding source for state financial aid could be inadequate for meeting students’ need in only three years.

A joint legislative committee met for the first time Wednesday to address the pending financial aid dilemma.

With more families qualifying for aid, and with funding for it depleting, the Joint Select Committee on State-funded Student Financial Aid was needed, said N.C. Sen. Richard Stevens, R-Wake, co-chairman of the committee.

Much of the funding for state financial aid comes from the escheat fund, money that comes from a collection of unclaimed property.

If the registered owner of a property dies or cannot be reached and has no living relatives, the state claims the assets and devotes them to the N.C. State Educational Assistance Authority.

But at the current spending rate, the escheat fund will be insufficient for supporting financial aid in only three years, Stevens said.

As of June 30, the fund contained about $500 million, according to data from the Fiscal Research Division, which provides analysis and budget information to the General Assembly. But they project that the fund will fall to about $50 million by June 2012.

“Not enough money is coming into it, and we’re taking out more money than is coming in,” said Richard Bostic, principal fiscal analyst in the Fiscal Research Division.

Bostic said more than 55,000 students received financial aid in the past year. The average grant was $2,300.

“Those grants are at stake in the next couple years,” he said. “The only options are to cut funding or try to replace it with general funding or some other source.”

During the past 10 years, the state has gone from giving $50 million to $343 million in need-based student financial aid, said Shirley Ort, director for scholarships and student aid at UNC. She attended the meeting to offer a campus perspective.

Stevens said even if 50 percent of the revenue generated by a state-mandated $200 tuition increase comes back to the UNC system for need-based aid, as system President Erskine Bowles has proposed, it won’t compensate for the escheat fund’s shrinking assets.

“The only other source is the state’s general fund, basically,” Stevens said. “That’s why we’re going to be looking at some things like consolidating some of the programs.”

Stevens said the committee will look at the efficiency of administering aid, the qualifications for financial aid and the community’s awareness of what is available during the next several months.

The next meeting, on Dec. 8, will address the escheat fund, said committee member N.C. Rep. Larry Bell, D-Sampson. The committee might draft legislation to improve the financial aid process for the state if it sees reason to do so.

“There’s a bipartisan interest in the high cost of education, and I also feel that if we come up with legislation, it will receive bipartisan support,” he said.



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