UNC Board of Governors approves need-based aid cap

Aug. 01, 2014 @ 06:05 PM

The University of North Carolina Board of Governors approved Thursday a 15 percent cap on the share of need-based aid that is paid out of tuition dollars.

Supporters of the new policy hope it will help rein in tuition growth and will help working families who pay the full cost of tuition. Others say it could disproportionately impact middle-class students who wouldn’t qualify for other types of need-based aid.

 “We have to keep the eye on our other target, and that is that we have to keep tuition as low as possible or you’re going to throw other people into a need-based aid situation,” said Board of Governors member J. Craig Souza. He said after the meeting that board members feel need-based aid has grown and has met the needs of existing students.

Under the new policy, campuses that already spend 15 percent or more of tuition revenue on need-based aid – including the University of North Carolina at Chapel Hill, N.C. Central University and four other campuses – will be frozen at their current funding levels.
However, board members have said those schools can use other funding sources to grow need-based aid and that the schools at or above the cap would not have to cut tuition funding levels to hit the cap.

There was no discussion about the new policy before the vote was taken at Thursday’s meeting. But after the vote, board member Hannah Gage said the board’s mandate is to hear all perspectives and she didn’t think there was enough time to allow the full board to hear all sides.

“I didn’t think there was an appropriate amount of time for the full board to hear from the campuses that are the most affected by this,” she said. “We had no discussion whatsoever of the unintended consequences. It’s…important for us to always be informed when we’re making a big change. This is such a change.”

Gage said she doesn’t think anyone has a “real idea” of what the debt levels will be on the five campuses that face freezes on need-based aid levels.

“I think (in) the future, that he process should include an opportunity for the whole board to hear about all sides,” she said.

Board member Steve Long said the working group behind the original proposal included chancellors from three universities along with board members, and the discussion of the proposal at a committee meeting Thursday didn’t reflect the full amount of discussion on the proposal.

In an interview after the vote, UNC-Chapel Hill Chancellor Carol Folt said the school’s intent is to make sure that need-based aid students aren’t impacted by the change.

“So we’re going to find and explore every alternative, but our goal is to continue to provide the need-based aid we do -- which is quite extraordinary in the country -- and we’re going to continue to do it,” Folt said.

Stephen Farmer, UNC-Chapel Hill’s vice provost for enrollment and undergraduate admissions, said about 43 percent of the entering class last year received need-based aid, and the median household income for that group was $60,000. That means half of those students come from households who make more, and he said many of those students would not qualify for federal and state income-based grants.

“So what they get is tuition grants, grants funded by gifts and tuition,” he said. “So we’re worried that the impact on this change, unless we can find other sources of revenue, so it’s going to fall disproportionately on the middle-class students that the change is designed to benefit.”

UNC System President Tom Ross said he believes there are limited resources, and the board is trying t balance competing factors: protecting financial aid and keeping tuition low.

“There are a lot of models in higher education,” Ross said. “You can look around and see institutions that have very high tuition and very high financial aid. You can find schools that are very like our system that have low tuition, and maybe don’t have as much invested in financial aid but don’t need as much because tuition is low.”

Ross said “what you don’t want” is an institution with high tuition and no or limited financial aid that would deny people access.

“We’ve been fortunate in North Carolina to have state support that has enabled us to have low tuition, and therefore less need for financial aid, and that kind of model, and that’s what we’re trying to preserve,” Ross said.

Cedric Johnson, a public policy analyst with The Budget and Tax Center of the N.C. Justice Center, a Raleigh-based advocacy group for low-income people, raised concerns about access.

 “We know that finances and paying for college is one of the reasons that students choose to go to college and why they don’t finish college, and so this is just another barrier that they would have to face (and will) make it more difficult for students to pay for college,” he said.

Also at the meeting, the board approved a four-year plan through the 2018-09 academic year that put a 5 percent cap on annual tuition and fee increases for resident undergraduates. Ross said board members sent a message to the campuses they did not want to see them all come back with requests to raise tuition the maximum. He also said he expects that the board will evaluate the impact of the need-based aid cap.

“Fifteen percent now is the cap now, (it’s) adequate and it looks like it’s sustainable,” he said. “(If we) get down the road and get to a situation where we don’t have enough resources for financial aid, we’ll have to approach it another way.”