Full UNC board limits use of tuition for financial aid — The News & Observer


Published: Aug. 2, 2014

Full UNC board limits use of tuition for financial aid

By Jane Stancill, jstancill@newsobserver.com

CHAPEL HILL — Public universities will be limited in their ability to use tuition revenue to cover costs for financially needy students under a new policy adopted Friday by the UNC Board of Governors.

The board unanimously approved a cap that prevents UNC campuses from devoting more than 15 percent of tuition revenue to financial aid. For six campuses that currently reach or exceed the 15 percent threshold – including N.C. Central, N.C. State and UNC-Chapel Hill – tuition-funded financial aid dollars will be frozen.

Board members defended the vote as a prudent attempt to hold down tuition levels.

Fifteen percent is a reasonable limit, because most campuses are under that threshold, said board member Craig Souza, who led a work group that put the proposal together.

“We also have to keep our eye on the things that we can do to keep tuition as low as possible,” Souza said, adding that systemwide financial aid has grown dramatically in recent years, from $90 million in 2009-10 to $205 million in 2013-14.

Officials at UNC-CH warned that student indebtedness could double in a few years’ time with the new cap.

Some middle-income students will be affected by the change and will have to borrow more because they’re not eligible for government grants, UNC-CH administrators said. The median family income of UNC-CH students receiving financial aid is $60,000. About 43 percent of students receive need-based aid at the campus, which now sets aside 20 percent of tuition revenue for financial aid.

UNC-CH Chancellor Carol Folt said the policy will present a challenge and that the campus will have to work harder to find other sources of funding to ensure affordability for students. The university is committed to do that, she said.

“We are a university that believes in being a place of opportunity for people that is not associated with their ability to pay,” Folt said. “It’s about their talent and their grit and their determination.”

Others were more blunt in their assessment of the change by the Republican-dominated board.

“This is really right-wing ideology driving this policy issue,” said James Moeser, the former UNC-CH chancellor, whose tenure was marked by the creation of the nationally groundbreaking Carolina Covenant, a program that provides a debt-free education to low-income students.

“It really creates a difficult bind for the university,” Moeser said of the new cap. “I think the university is going to have to raise private funds. There’s a real hostility here to using any kid of public funds for this purpose.”

Board member Hannah Gage raised concerns about the process. The full board was not fully informed, she said, and had no discussion of the measure’s unintended consequences on some campuses.

“It’s an important change that we’re making,” Gage said. “There are campuses that are frozen. I think that it’s important for us to be always informed when we’re making a big change, and this is such a change. I don’t think anyone has any real idea of what the debt levels will be on the … campuses that are frozen.”

John Fennebresque, the board’s chairman, said the board is looking out for all North Carolina families by trying to keep tuition down.

“It was a difficult decision. I believe it was the correct decision,” he said. “This will cause some problems for some people on some campuses. We think ultimately it is the best thing for the students and the campuses.”

Student board member Alex Parker said the limit was fair but that the impact must be monitored to ensure that a UNC education is accessible to students of all socioeconomic levels.

“I think that policy is going to need to be looked at every year,” Parker said.

Also Friday, the board approved a four-year tuition plan that limits annual campus tuition increases to 5 percent and limits fee hikes to 5 percent through 2018-19. Board members emphasized that campus chancellors shouldn’t expect to get the green light to raise tuition by 5 percent each year.