Hands in the cookie jar

The benefit of a savings account is when you earn more than you spend, you accrue interest in the long term.

Apparently, the state government needs to relearn some financial basics if it wishes to save an important source for student financial aid.

Escheat funds, which represent unclaimed private property, have been used to supplement grants toward state-funded financial aid for students. At first, only the interest earned on the escheat fund was used for this purpose.

But since 2004, the state has been directly withdrawing money from the principal to pay for financial aid, instead of only using the interest.

At the end of the fiscal year, the fund is expected to fall to the $200 million limit that the state treasurer has set. At that threshold, no more money can be spent for students, because the state must be able to pay those who claim their property.

This would decrease the amount of money for student financial aid, and in these rough economic times, students have become more dependent on aid in order to pay for college.

 The state should not have been so financially irresponsible with the fund. As a consequence, some students may not be able to have an opportunity to have a college education.

 A committee in the N.C. General Assembly will focus on how to solve this budgetary problem.

After studying the issue, it will propose certain recommendations by May.

The committee should recommend that direct withdrawals from the escheat fund be stopped immediately. Alternative sources for student aid need to be found in case the escheat fund runs out.

The state could look to underutilized existing scholarships and grants, which may help make up some of the shortfall.

If the situation is not remedied, then the state risks defaulting on one of its biggest investments for the future: the students.