UNC BOG finance committee supports need-based aid cap

Jul. 31, 2014 @ 08:55 PM

A UNC Board of Governors committee moved a proposal forward on Thursday to cap the amount of need-based aid that comes from tuition dollars in an effort to help working families. But others say it may hurt middle as well as low-income families and could lead to more student debt.
The board’s Budget and Finance Committee voted Thursday to move a proposal forward to cap the share of tuition at each system campus that goes to need-based aid at 15 percent. The full board will consider the proposal at its meeting today in Chapel Hill.
“I always have to start this discussion with pointing out that all of us on the Board of Governors strongly support need-based aid,” Board Member W.G. Champion Mitchell said at the meeting. “It is essential to the character of the university. It is essential to the service of the state, and no one is talking about doing away with need-based aid. … What it does do, is try to cap the burden that will be placed on working families in North Carolina going forward.”
The proposal, if approved, would mean that 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 levels.
However, Mitchell said the schools could use other funding sources to grow need-based aid. He also said the schools would not have to cut tuition funding levels currently provided for need-based aid, but would freeze the amount they’ve allocated to need-based aid from tuition.
In fiscal year 2015, UNC-Chapel Hill’s share of tuition devoted to need-based aid is more than 20 percent, according to board information. N.C. Central University’s is 15 percent, N.C. State’s is 17.9 percent, Elizabeth City State University’s is 20.1 percent, Fayetteville State University’s is 16.9 percent, and Winston-Salem State University’s is 15.9 percent.
The committee is moving the proposal forward as tuition has grown faster than inflation, Mitchell said, and working families have to take measures such as taking out second mortgages to cover cost. That’s as an “increasing proportion of tuition has gone to funding need-based aid for other people,” he said.
Steve Farmer, UNC-Chapel Hill’s vice provost for enrollment and undergraduate admissions, said university officials share concerns about student debt, about middle-income students and working class families. But he also said that not just low-income students get need-based aid.
“Thousands of middle-income families benefit from need-based aid,” Farmer said.
Farmer said more than 43 percent of students at UNC-Chapel Hill benefit from need-based aid, and that share has grown since the recession. A share of the need-based aid comes from tuition, he said. It also comes from state and federal funding sources.
“If we can’t use tuition and we can’t find other sources to cover aid the only other way to cover is by (student) debt,” Farmer said.
Among other programs, he said need-based aid supports the Carolina Covenant, a program to allow all eligible low-income students who earn admission to get the opportunity to graduate debt-free from the school using grants, scholarships and work-study. Farmer said the program is for students from families at or below 200 percent of the federal poverty limit, adjusted for family size.
“We’re going to do everything we can to limit impact to students,” he said.
Randy Woodson, chancellor of N.C. State University, said the school will have to try to raise more private dollars for need-based aid.
“We’re going to have to work hard to try to provide that financial aid and to grow private sources,” he said.
Board member Hannah Gage said after the meeting that while there has been “a lot of discussion” about “rich paying for the poor” nationally, she said believes that’s not what’s driving the proposal that moved forward in committee Thursday.
“(Some) say it’s a class warfare discussion, but the point I’m making is, in some ways, as long as we’re taking a large chunk of tuition and making it for need-based aid, we’re feeling better about raising
Mitchell said the proposal aims to help curb tuition increases.
Separately at the meeting, the committee voted to recommend approval of a plan that would cap annual tuition and fee increases at 5 percent through fiscal year 2019. There would be flexibility, however, if state funding increases or falls.
The plan would replace the current four-year plan if adopted. According to meeting documents, the board has put the four-year tuition increase guidance plans in place since 2006 to try to make sure parents and students have some cost predictability.
If the campuses want to increase their tuition rates within those guidelines, Mitchell said the campus leaders would still have to bring their tuition increase proposal before the board and “tell us where they’re going to spend it, and then we monitor their budget.”
“We will not allow them to increase tuition to cover anything above the (need-based aid) cap,” he said.
Mitchell said the committee’s recommendation on Thursday is the “first step” in examining need-based aid. He presented other questions for the committee to consider including asking how long should a student be provided with a need-based aid, and what kind of academic progress should be expected of students receiving it.