Using tuition funds for financial aid makes sense

April 15, 2014 

With Republicans now controlling who sits on the University of North Carolina system’s Board of Governors, it’s not surprising that changes would follow.

And changes are needed. A little fresh perspective and an overview of long-standing policies can be valuable.

But it appears members of the new board are considering a change in financial aid that won’t be helpful. The UNC board is considering ending a policy that takes money for financial aid out of the tuition pot to which all students contribute. Some board members are concerned that using regular tuition money to provide aid to others hurts middle-class students.

The truth is, tuition in the UNC system is too high for everyone. Although a state constitutional mandate requires that an education should be as close to free as “practicable,” the UNC system has had multiple hikes in recent years and drifted from that principle.

Yes, taxpayers subsidize the education the system provides, though not as much for out-of-state students, who pay closer to the actual cost of their educations.

But there would be multiple problems with eliminating tuition revenue as a source of financial aid.

First, what would happen if the system lost the $126 million in financial aid that came out of the tuition pool last year? The money would have to be made up or the university system would have to reduce scholarships and other forms of assistance. Most help, by the way, comes from the federal government in the form of Pell grants and loans.

Second, board members have to consider the larger picture: Providing aid, which allows lower-income students and even many middle class students the opportunity to attend a good university in the system, means the student bodies in the schools are diverse and reflect the overall population of North Carolina. That diversity enriches all students by exposing them to a student population that reflects the world into which they’ll graduate.

UNC system President Tom Ross rightly said that cutting off tuition as a source of financial aid wouldn’t affect just the students from lower-income households. “Some of this very aid,” Ross said, “supports the middle class, so that’s a dilemma. If you take it away, then you actually may be hurting some of the middle class that way as well.”

The cost of attending the research institutions in Chapel Hill and Raleigh, for example, runs around $17,000 a year for all expenses, and that’s on the low end. Many families that may own a home and have two incomes in North Carolina couldn’t take $17,000 out of their take-home income. Thanks to financial aid packages, they find a way to afford it, though to be sure parents still have to come up with a pretty hefty amount.

So let’s look at the longer-term benefit. More North Carolina students getting to college – and many of them will be the first in their families to attend – is good for the state. Better-educated workers with higher lifetime earnings strengthen the state’s economic foundation.

Those graduates, in turn, will raise families in which a college education is emphasized. And so on.

Financial aid, then, is an investment more than some kind of giveaway, and it’s one that produces dividends that make a positive difference for everyone, not just those who receive it.

Before Board of Governors members make, or even contemplate, a change in the financial aid formula, let’s hope they look not just at the books, but at the consequences.

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