Tuition Help May Not Last All That Long
College students and their parents were given a little sugar with the recent bad medicine of substantial tuition increases at many University of North Carolina campuses.
University officials have been quick to point out that additional financial aid will come with the latest tuition hikes, which will reach $750 at some schools.
Here's what they aren't saying: Enjoy the financial aid now, because one of the big pots of money used to pay for it is slowly draining away.
The state's escheats, or unclaimed property fund, is required by the state constitution to go to one purpose and one purpose only: paying college tuition for needy students.
In recent years, the fund has grown rapidly as state treasurers have become more aggressive collecting the money from the banks, the insurers and the retailers where it accumulates.
In 2008, $680 million in unclaimed money and property had come to the state, with just $28.3 million being reclaimed that year by the rightful owners, according to the state treasurer's annual report.
In the past, the bulk of the money that state legislators tapped for need-based scholarships and tuition grants came from the interest earned on the fund. But beginning in 2008, legislators began grabbing big chunks of the principal to pay for financial aid.
That year, the state paid out more money than it took in. Unclaimed money coming to the state totaled $111.9 million; the state paid out $100.7 million in principal and $27.4 million in interest for financial aid.
In 2009, an even bigger chunk in principal - $169.5 million -went out. Another $6.3 million in interest also went for tuition assistance, while just $107.2 million came into the fund.
The amount of money reclaimed rose to $39.3 million.
The result was that the total fund, in a single year, fell from $680 million to less than $600 million.
It doesn't take a genius to figure out that the trend can't be sustained for more than a few years. You also don't need to be a financial guru to know that depleting the fund's principal means less interest earnings in the future.
The state budget provision that allowed this latest round of tuition hikes directed that 20 percent of the money accrued from the increase go to financial aid. So, if you're a student of modest means at one of the UNC school campuses, you might feel like you've just been stabbed so that your blood can be used to give you a transfusion.
But recognize that you may be luckier than those who will follow you.
The chance that tuition will ever go down seems about as likely as a tea partier holding up a sign reading, "Don't Mock Barack."
State budget woes aren't likely to ease anytime soon. And a key pot of money used to pay for financial aid looks to be as stable as a makeshift cap on a deepwater oil well.
Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at email@example.com.
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