BOG considers tax cuts to families not qualifying for need-based aid

An attempt by the UNC-system Board of Governors to give tax breaks to families who pay college tuition but don’t qualify for need-based aid might not be feasible.

A proposal was made at the board’s February meeting to research a tax break option, which would have to go through an adjustment of state and federal tax codes to be viable.

It is also unclear if the tax break option would save families as much as hoped, said board member Jim Deal, who also works as a tax lawyer in Boone.

“At the highest level of tuition increases, which is around $600, it might save the people who qualify $30 or $40,” Deal said.

After the board approved an unprecedented tuition increase — as high as $695 for in-state undergraduates at UNC-CH — several members said they don’t agree with the system’s tuition policy that requires UNC-system schools to allocate at least 25 percent of the revenue from tuition increases to need-based financial aid.

At the meeting, board member Fred Mills suggested that the amount of tuition going to need-based student aid should be deductible from the taxes of those who paid tuition and got no need-based aid.

“When one student’s tuition is used to pay for another student’s aid, it should be treated as a contribution to charity and deducted from the taxes of the student or family who paid tuition,” said board member Burley Mitchell in an email.

Several schools, including UNC-CH, use more than the required 25 percent of tuition revenue to support financial aid programs.

Sen. Richard Stevens, R-Wake, said he expects there to be discussions about what portion of tuition should be used for student aid and the idea of tax deductions.

But he said it’s doubtful that a tax deduction could be implemented easily because the N.C. General Assembly can only change state income tax codes.

Stevens said any changes to the federal tax codes would have to be approved by Congress, which would be extremely difficult.

UNC-system Vice President for Communications Joni Worthington said administrators and the board haven’t had adequate time to research the proposal. She said UNC-system administrators will conduct fiscal and legal research to determine the necessary regulatory changes and how much enacting the proposal would cost the state.

“At this point it would be premature to speculate on how responsive the legislature would be to such a proposal,” Worthington said.

While getting a proposal such as this passed would require UNC-system administrators to lobby in the legislature, Deal said he’s not sure the tax deduction plan would save families that much in the long run.

Deal said a better option might be talking to legislators about how state money is allocated to the UNC system, which could give schools more freedom in how they distribute financial aid.

He said tuition revenue should be used for programs that benefit all students, and that he would also like to see state funding cover financial aid programs.

“I think there is a larger number of students who can’t afford tuition now then there have been in the past.”

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