The University of North Carolina at Chapel Hill and the UNC system’s other campuses continue to keep their spending of tuition money for need-based assistance to students from low-income families fairly flat, despite rising educational costs.
For Chapel Hill and three other campuses, that redistribution of tuition aid to financially challenged students is enforced by a three-year-old cap imposed by the system’s Board of Governors. In 2014, the board stipulated that a campus could not use more than 15 percent of its tuition receipts to fund need-based scholarships.
Chapel Hill, which had been among the most aggressive in using tuition funds to for need-based aid, will likely not be under that cap for a couple more years. At the point the cap was imposed, the university was spending about 21 percent of its tuition revenue on aid. This year, the $66.2 million set aside from tuition will constitute about 19.4 percent of the total revenue from that source.
UNC can supplement its tuition allotment with funds from donors and other sources, providing about $102.9 million in need-based aid. The university has been stepping up its efforts to bring non-tuition funds into the aid program, contracting, for example, with Barnes and Noble last year to operate student bookstores at a higher profit for the school.
Still, the cap is constricting badly needed aid. Last year, N.C. State University Chancellor Randy Woodson told the board's budget committee he suspected aid shortfalls would mean students and their families would be forced to borrow even more money for a college degree.
"We've seen students taking on more debt than when we were increasing financial aid each year," Woodson said.
Indeed, recent government data affirm what many young men and women know — debt they incurred in college is limiting their career and life choices and weighing down their finances. Coincidentally, The New York Times pointed out the consequences in an editorial just days after the UNC board discussion last week.
“A new report by the Federal Reserve Bank of New York documents the hardship that has resulted from the soaring level of student debt taken on to cover those costs,” the Times editorial board wrote. “Loan payments are keeping young people from getting on with life, delaying marriage and homeownership, other data show. Research also suggests that student debt is crowding out other investments and spending that would otherwise occur.”
The bottom line: Student debt is having economic as well as social impact. At a time when economic growth is anemic and income inequality stubbornly persistent, the tuition-aid cap continues to be a short-sighted limitation.