By Gregory Childress

gchildress@heraldsun.com; 918-1046

Chapel Hill -- The UNC Board of Governors doesn't usually begin talking about possible tuition increases until well after the Christmas holidays.

But with the economy forcing more and more students to apply for need-based aid, tuition increases have already become a hot topic of conversation.

"The demand for need-based aid has just skyrocketed," said UNC system President Erskine Bowles during a news conference following the close of the board's November meeting Friday.

The increased need for tuition assistance among students attending the system's 16 universities has led Bowles to ask state legislators to allow the UNC system to keep tuition revenue and earmark 50 percent of it for need-based financial aid.

Going into discussions next year, Bowles said the system will likely start with $12 million less for need-based tuition than it had for the current academic year because of a one-time award from the state.

"We'll have less money to deal with next year for a greater demand," Bowles said.

Bowles said the next largest percentage of any tuition increase would go to improving graduation and retention rates.

"We've got to do a better job of not just getting people in the door but making sure they are graduating and graduating with a diploma that means something, and that's something nationwide that all university's are working on," Bowles said.

In an effort to help balance the state budget, the General Assembly adopted a four-year tuition rate plan last year that included an across the board tuition increase by the lesser of $200 or 8 percent for the current school year.

But legislators postponed implementing that plan for one year at the request of university officials.

Money generated by any state-mandated tuition increase would go into the general fund, but revenue gained by tuition increases set by schools remain on campus.

Bowles is hoping that lawmakers will allow the universities to set tuition increases so that schools can keep the revenue to address need-based financial aid demands and fund retention and graduation efforts.

Under the UNC system plan that allows a maximum 6.5 percent increase, 13 campuses would impose a lower in-state tuition increase than has been approved by the General Assembly. Bowles recommends that no campus increase in-state tuition by more than $200.

Meanwhile, at UNC, Chancellor Holden Thorp is recommending a 5.2 percent increase for undergraduate students that would keep any tuition increase under the $200 mark set by the General Assembly, even though a campus advisory task force recommended a higher increase of 6.5 percent.

"We decided since the legislature has already put that $200 number out there for in state, we're going to go with that," Thorp said.

Thorp said he will also recommend that out-of-state student also get a 5.2 tuition increase, which has led some out-of-state students to complain.

But Thorp said even with an increase, out-of-state students are getting a great bargain.

"The out-of-state students are still getting a significant subsidy in their tuition. Our out-of-state tuition is high, but it's a lot lower than the out-of-state tuition at a lot other universities and is certainly less than half of what it would be to a private university," Thorp said.

When asked about out-of-state student complaint about proposed tuition increase, Bowles said out-of-state students get great value for their dollars.

"I think they are the luckiest people in the world," Bowles said. "I think if you look at what their cost is and what their return is, it's a great bargain.