Financial Aid Freeze Could Drive Up UNC Student Debt

UNC-Chapel Hill officials worry the newly approved system-wide freeze on need-based financial aid could drive up student debt.

Stephen Farmer is UNC-Chapel Hill’s Vice Provost for Enrollment and Undergraduate Admissions. He says the move by the Board of Governors to freeze the financial aid budget for Chapel Hill will make it hard for the nation’s first public university to fulfill its commitment to affordable education.

“It’s going to be hard for us to find alternative sources of funding,” says Farmer. “If we can’t find alternative sources of funding, then we predict that debt will rise and more students will have to borrow.”

The UNC Board of Governors voted unanimously on Friday to cap tuition increases at five percent each year for the next four years at all of the state’s 16 colleges and universities. The board also placed a cap on need-based financial aid, limiting it to 15 percent of tuition revenue starting next year.

Currently, UNC-Chapel Hill and five other schools already spend more than that on need-based aid. Those schools are not be required to decrease the amount of financial aid offered to students, but will not be able to increase the aid budget even if tuition goes up. Farmer says financial aid is crucial for many Chapel Hill students.

“I think there’s a misperception out there that the only students that receive need-based aid at Carolina or other colleges and universities are students that are truly low-income,” says Farmer. “The fact of the matter is that the overwhelming majority of students at Carolina who receive financial aid are middle-class students, they come from middle-income households.”

More than a third of UNC Chapel Hill students take out loans to help pay for education. Once the aid freeze is in place, that number could rise to about fifty percent. Farmer says that would effectively undo much of the work that’s been done in the past decade and a half to ensure UNC-Chapel Hill remains affordable.

“We would not have been able to do what we’ve been able to do over the last 15 years, keeping Carolina affordable, keeping it a best value, making sure that the average indebtedness of our students is no higher today in real dollars than it was 15 years ago,” says Farmer. “We couldn’t have done all those things if we hadn’t been able to return a share of the tuition revenue that we collect back to students in the form of need-based aid.”

The aid freeze was approved in conjunction with a tuition cap, but Farmer says that’s not likely to help students in need, as the cost of room, board, and books continues to go up independent of tuition.

Still, he says the university is committed to making sure as many qualified students can attend as possible.

“This university is completely committed to making it possible for every student we admit to enroll here,” says Farmer. “We don’t think that a great public university should only be available to the people who can afford to pay. That’s a bedrock value of Carolina and we’re going to fight like crazy to defend it. So we’ll do everything we can to mitigate the impact of this proposal on our students because our students are worth defending.”

The tuition cap and financial aid freeze are slated to go into effect in 2015.

UNC System Pres. Champions Freezing Tuition

CHAPEL HILL – Undergraduate students enrolled at the state’s 16 public universities, UNC Chapel Hill included, will likely have a reason to rejoice for the 2014-2015 school year. UNC System President Tom Ross said Thursday he hopes to freeze tuition costs for in-state students after a decade of steady increases.

Ross told members of the UNC System’s Board Of Governors at a Thursday budget meeting: “I think it is time for us to step back and not increase tuition. It’s going to be a struggle because we received another budget cut this year, but we have to figure out how we can be more efficient and how we can absorb these cuts.”

As part of the General Assembly’s two-year budget plans, cuts to the UNC System will be substantial. The spending plan allocates $126.5 million less than what was projected would be necessary to maintain last year’s operating levels, according to the Associated Press.

Charles Perusse, Chief Operating Officer for the UNC System, recapped the 2013 Legislative Session, which many criticized for the cuts made to education, writing, “We had a number of victories in Raleigh, but many of the victories were from playing defense.”

“The biggest wins were taking less of a reduction that we have seen over the past few years. Our net cut is about 2.5 percent this year [2013-2014], but if you look at the big reductions we took in the 2011-2013 time frame, those were close to a 13 percent reduction. We fared fair better this year and we are very thankful for that,” Perusse said.

UNC-CH has taken approximately $235 million in total state cuts since 2008.

Perusse counted other successes in areas like fewer line-item cuts for significant management flexibility and retaining UNC’s IT Exemption Fund.

“We kept management flexibility, information technology, and human resources. It is very important for us to meet student demands in the IT area as well as being able to recruit and retain important faculty,” Perusse said.

A funding cut that Perusse said was very disappointing was the loss of $15 million in appropriations for the UNC School of Medicine.

“By way of background, that appropriation used to be about $46 million. Then five years ago, when the recession hit and revenues became tight, that $46 million has been whittled down and that $15 million was the remaining portion—that eliminates it totally.”

Though much of the focus was on in-state students, Perusses said out-of-state students may catch a break in the 2014-2015 school year as well.

“The Legislature did include some built-in, non-resident tuition increases next year. 12.3 percent on four campuses [including UNC-CH] and six percent on other campuses, but I think there’s going to be further discussion about whether we want to get those tuition increases eliminated or reduced going forward,” Perusse said.

Tuition changes for the 2014-2015 school year won’t be finalized until this February.

The full Board Of Governors will meet Friday and is expected to vote on budget allocations for the 17 universities.

A noteworthy audience member at Thursday’s budget discussion was UNC Chancellor Carol Folt. The Board added 15 new members earlier in the day.