April 11, 2014

UNC board debates financial aid culled from tuition revenues

In the UNC system last year, $126 million in need-based student financial aid came out of the pockets of other students, and some UNC Board of Governors members want to see an end to the practice.

In the UNC system last year, $126 million in need-based student financial aid came out of the pockets of other students, and some governing board members want to stop the practice.

But there are no other pots of money to draw on for student aid if tuition set-asides are dropped. Since 2006, the UNC Board of Governors has required campuses to set aside at least a quarter of tuition increase proceeds for financial aid; in 2010-11, when the recession had hit families hard, the board required campuses to earmark half for financial aid.

The funding scheme could be in for big changes after months of opposition by some new members of the board, now dominated by Republicans appointed by the GOP-controlled legislature. Board Chairman Peter Hans on Friday committed to study the issue by year’s end.

Meanwhile, outside the meeting, student protesters gathered to advocate for a comprehensive plan to provide enough aid so that UNC system students could graduate debt-free by 2020. There’s no estimate on how much money that would require, but such a move is extremely unlikely.

Schools, students dependent

Fifty-nine percent of UNC system students received need-based aid last academic year. Financial aid primarily comes from the federal government, in the form of Pell Grants and subsidized and unsubsidized loans. The state is spending $122.5 million this year in a state grant program, plus $18 million in scholarships from the state lottery.

But the tuition set-aside has become an increasingly key part of the financial aid mix. That troubles some board members, who see it as an unfair shift of cost to the middle class.

“We are loading this burden onto middle class students, and it’s got to stop at some point,” said board member Champ Mitchell. “I realize, and so does I think everyone on this board, that we cannot go in and roll this back as it exists today because the schools have become so dependent on it.”

Mitchell proposed removing the financial aid set-aside Friday for a new master’s degree in toxicology at UNC-Chapel Hill. That suggestion was dropped after other board members objected to a piecemeal solution.

Students outside the meeting said the board needs to look at the big picture of college costs and rising student debt. They want the board to have public forums on affordability.

“We need more financial aid, expanded financial aid, not (for) us to be thinking about cutting and making giant gaps in the financial aid funding pool,” said Matt Hickson, a recent graduate and director of a group called the N.C. Student Power Union.

He said he doesn’t understand why the board is overly concerned with a portion of tuition going to financial aid.

“Every time we raise tuition, it goes towards a lot of things, and it’s going into a lot of people’s pockets that aren’t students,” Hickson said, pointing out that private companies run dining services. “Those people are getting their pockets lined by tuition increases that we’re paying for. So why would it not go back to other students who need to get into the university? To me that’s insane.”

Hans said the board is trying to balance two priorities – having enough need-based financial aid to keep the university accessible and searching for ways to minimize the impact on the middle class.

“If were only remove the use of tuition proceeds for need-based aid, that would dramatically impact availability of need-based aid,” Hans said, adding, “We’ve got to make sure that whatever we do wouldn’t have unintended consequences.”

No easy answers

UNC President Tom Ross said the issue is complex and there are no easy answers.

“Some of this very aid supports the middle class, so that’s a dilemma,” he said. “If you take it away, then you’re actually may be hurting some of the middle class that way as well.”

On Thursday, during a board workshop on financial aid, some members expressed frustration with data provided by UNC General Administration staff. They asked for more data to be able to dive into the issue.

Not all board members were convinced there was a problem with the current methods of funding financial aid.

“I don’t know that it’s an issue,” said board member Harry Smith. “It appears to be a big issue with members of the board, but I don’t know that it’s an overall issue for the people who are writing the checks.”

The board also approved a new transparency statement to be put into tuition bills. It will show the uses of tuition. The percentage of 2014-15 tuition going to financial aid ranges from about 10 percent at UNC Charlotte to nearly 25 percent at UNC-Chapel Hill.

“I just think this number should be pointed out on the statement that the parents get to see at home,” said board member Frank Grainger, “so that they understand what they’re paying for – that they’re not just paying for their particular child’s tuition, but a portion is going to someone else’s child’s tuition.”

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