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Board of Governors approve restrictions for paying for need-based aid

The Board of Governors might not have intended to create an access problem, but UNC Chapel Hill officials worry they have.

The UNC Board of Governors voted to cap the amount of tuition that a UNC-system school can use for need-based aid at 15 percent. Six schools, including UNC Chapel Hill, meet or exceed that limit, meaning they'll have to find a new way to pay for the programs.

“We didn’t intend to create an access problem,” said Craig Souza, the chairman of the working group that submitted the recommendation, in a conference with reporters. “We don’t think it’s an access problem in terms of getting aid. We have to do things to keep tuition as low as possible.”

The financial aid working group that created the proposal met many times in the hopes of preventing large tuition hikes, said board chairman John Fennebresque.

“This is a hard decision — it will cause some problems for some people on some campuses,” he said. “Ultimately, we think, it’s the best decision.”

UNC-Chapel Hill Chancellor Carol Folt said she and other UNC-CH administrators have been communicating to board members what the impact of the cap would be on accessibility. Middle-income students who aren’t eligible for many loans but still need a form of aid could be negatively impacted, she said.

“It’s my job to work with everybody to work and fit that need and work with the state,” she said. “There are a lot of conversations still to come.”

How the cap works

There are many financial aid models in higher education, said UNC-system President Tom Ross. Some colleges have high tuition and generous aid programs, and others have low tuition but don’t dole out as much aid, Ross said.

“What you don’t want is the model at many universities — where you have high tuition and no financial aid,” Ross said. “...In North Carolina, we have state support that allows us to have low tuition and less access for financial aid.”

The cap requires schools to freeze the amount of tuition going towards need-based aid. If tuition increases, the schools that meet or exceed the cap cannot use additional tuition money to pay for need-based aid.

“The board is trying to protect need-based aid,” Ross said. “It’s not going to go away. Schools that are over that cap are not required to drop to that cap.”

Ross said there are alternatives for students who need money to attend college, including a state financial need-based aid program, a lottery scholarship and the Pell Grant program.

Friday’s meeting

Friday’s approval of the cap was swift: it was unanimous and there was no discussion of merits or drawbacks of a cap.

It wasn’t until after the board approved “Freeze and Cap” that emeritus board member Hannah Gage criticized the way it was passed.

"I don’t think there was an appropriate amount of time for the full board to hear from campuses affected," Gage said. 

"I don’t think anyone has any idea of what the debt will be.”

At the Committee on Budget and Finance’s meeting yesterday, the presentation and approval of the cap took less than ten minutes.

A way to stop tuition increases

Harry Smith, chairman of the board’s budget and finance committee, said board members would continue to evaluate the cap. If schools are low on resources, the board could change its policy, he said.

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But the board’s goal is to make sure that tuition doesn’t rise more than it needs to, he said.

“We have to keep tuition as low as possible or we’re going to throw people into a need-based aid type situation.”

UNC-Chapel Hill’s Office of Scholarship and Student Aid estimates the proposal could cause the average student’s debt to double — from $17,000 in loans to $33,000 — within three to four years. This was estimated by using the current aid year’s transactional data, said Shirley Ort, the office's associate provost and director.

The modeling assumed tuition would not go up and looked at expected increases in health insurance, housing, textbooks, and other living expenses over the next five years, which is estimated at about 4.7 percent, Ort said.

Souza and Ross said they could not comment on how and when the cap would begin to translate into its intended cost-savings for students. 

“If tuition were to remain exactly the same, it should be the same amount of financial aid dollars going to support the same amount of tuition dollars moving forward, so it shouldn’t affect anyone,” Ross said.

“Where it will affect someplace like UNC Chapel Hill is if they are above 15 percent — if they raised tuition, they would not be able to add to that set-aside pool. They have the choice of adding other resources from other sources to financial aid”