Potential budget cuts could jeopardize financial aid awards

A legislative proposal to decrease state financial aid funding by $37.6 million for the 2011-2012 academic year could throw University aid packages into uncertainty.

Republican leaders of the N.C. House appropriations subcommittee on education released their budget proposal, which includes a $483 million cut for the UNC system, Tuesday afternoon.

If the proposal passes, need-based aid would be limited to nine semesters beginning in the 2012-2013 academic year, and schools would have significantly less to give out in aid.

“We’ve just got a lot of things up in the air,” said Steve Brooks, director of the N.C. State Education Assistance Authority.

The University has seen a modest increase in financial aid applications this year and has sent out some award statements, said Shirley Ort, associate provost and director of scholarships and student aid.

But students must read the fine print, which says the award amount hinges on federal and state aid appropriations, Ort said.

“The world of financial aid is very uncertain, even in good times,” she said. “In bad times, it’s even more problematic,” she said.

The University has never had to retrospectively lower aid awards before, but might have to for the coming year’s awards, she said.

If students receive less aid, they will have to take out more loans, Ort said.

According to a recent report by the UNC system, 11.2 percent of in-state undergraduate students at UNC-CH received federal need-based loans in fall 2009.

The average amount of in-state students in the system who received the loans that year is more than three times the percentage of UNC-CH students.

With an increasing number of students turning to loans, federal Stafford loans, state forgivable loan for service programs and private loans should be the ones they consider, said Ben Kittner, marketing research and public relations manager for College Foundation, Inc.

He said students should look to federal loans first.

“There are private loans, which really ought to be your last resort because they are expensive.”

But some students have already borrowed the maximum amount of federal loans; so, they would have to take out more expensive private loans, Brooks said.

UNC-system President Thomas Ross said in a statement he is concerned about the proposed reduction in state funding for all forms of financial aid.

He said, “That is a tremendous concern, given that 60 percent of our in-state undergraduates depend on need-based financial aid, and rapid tuition increases have put additional strain on students and their families.”

Contact the State & National Editor at state@dailytarheel.com.