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Friday March 24th

Board of Governors targets need-based aid programs

It's a fact that the need-based financial aid program is expensive to maintain — and in this budget climate, administrators feel pushed to make tough calls. But policymakers also say it's hard to dole out cuts to one of the few remaining programs that makes Carolina and her 15 sister schools in the UNC-system so affordable.

The UNC Board of Governor's Committee on Budget and Finance will meet Thursday to vote on a contentious proposal — to institute a 15 percent cap on the amount of tuition a UNC-system school can use for need-based financial aid.

  • The six UNC-system schools which use more than 15 percent of tuition revenue towards need-based aid include UNC Chapel Hill, N.C. State University, Elizabeth City State University, Fayetteville State University, Winston-Salem State University and N.C. Central University.
  • The average indebtedness of a UNC-system graduating resident senior with loans is $22,229, according to the board's Working Group on Financial Aid and Tuition.
  • About 74 percent of need based aid comes in the form of a grant or scholarship, according to the Committee on Scholarships, Awards and Student Aid.

At about 21 percent, UNC Chapel Hill uses the largest percentage of its revenue for need-based aid out of the 16 schools in the UNC system. UNC Chapel Hill is one of two public universities that meets 100 percent of demonstrated need, meaning any student whose family income falls at or below 200 percent of federal poverty guidelines — about $44,700 for a family of four — won't have to take out loans.

Chancellor Carol Folt said her administration was determined to keep UNC-CH affordable.

"Keeping our costs low is also critical and we've been really good at that as well," Folt said at last week's Board of Trustees meeting. "So this is not something we're going to stand back from."

Need-based aid is partly funded by undergraduate tuition, meaning students who don't qualify for need-based aid subsidize tuition for students who do. In-state tuition has increased by more than 25 percent since the 2011-12 school year, according to data from the University's Finance Division.

And proponents of the cap say it's time the University stop pushing this burden on middle-class families.

The board's Working Group on Financial Aid and Tuition, which is making the recommendation to the committee, has proposed no additional tuition revenue be used for need-based aid until the University is below the spending limit. The proposal said system schools should find alternative ways to fund need-based aid once the cap goes into effect in 2015.

Forty-three percent of UNC-CH undergraduates used need-based aid in the 2012-13 school year, according to the according to UNC-CH's Committee on Scholarships, Awards and Student Aid. Need-based aid cuts the average cost for in-state students to $6,454 and to $28,236 for out-of-state students.

If passed by the committee Thursday, the full Board of Governors will vote on the proposal Friday.

Accessibility and affordability

"We're going to work with the Board of Governors and we're also going to continue to work with our internal budgeting, because our commitment to accessibility and affordability is about as central as we could imagine it to be as a university," Folt said last week.

Student Body President Andrew Powell said if the recommendations are adopted, the University will have to find a way to make up the difference or abandon its commitment to meeting 100 percent of demonstrated need.

"(It) could significantly harm our students and in turn the overall strength of our university," Powell said in an emailed statement.

"The 'freeze and cap' requirement would likely prevent UNC-CH from being able to continue meeting 100 percent of demonstrated need for all students, barring some significant new source of funding outside of tuition."

An unfair burden

W.G. Champion Mitchell, a board member on the Budget and Finance Committee and a proponent for the cap, said middle-class and working families unfairly bear the cost of funding need-based aid for other students.

"To continually allocate the burden on working families who have to borrow money to send students to college is not a fair way," he said. "In many cases, if you look at the amount of debt, it’s about the same amount that’s being taken to give to other people. Is that fair to working families? I don’t think it is."

The average UNC student graduates with an average debt less than $17,000 — much lower than the national average of $29,400, according to the Office of the Chancellor.

Mitchell said politics — board members are appointed by legislators — or unfairly singling out Chapel Hill played no part in the proposal.

"Fairness is neither conservative nor liberal," he said. "If you want to look at it that way, to me it’s a populist action because what we’re worrying about is people...who don’t get a lot of aid but have to pay for others."

Mitchell said he expects the 15 percent cap to be approved by both the committee and board this week.

"We all recognize the importance of need-based aid," said Mitchell, who said he personally donates to the need-based aid scholarship fund at UNC.

"No one is attacking need based aid. Every time you get into this, the response is, 'What is the right way to allocate the burden?' … The question is, 'What’s the fair way to allocate the burden?'"

Senior writer Jane Wester contributed reporting

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