A Bold Plan University commits $16 million annually to keep higher ed affordable

Photo by Andrew Shurtleff

U.Va. President John T. Casteen III unveils the new financial aid plan at a Feb. 6 board meeting.

By Dan Heuchert

A college degree has long been a launching pad to a better life. But increasingly, even middle-income students and their families worry that college debts will become a burden, limiting future career and educational opportunities.

In response, the University has unveiled “Access UVa,” an ambitious financial aid program – unprecedented among U.S. public institutions – designed to keep higher education affordable for all students who qualify for admission, regardless of economic circumstance.

“To learn, and by learning to become an informed citizen in a democratic society, is a fundamental American right held dear by Virginians,” said University President John T. Casteen III. “Because access for students with need is a priority for us, the University of Virginia has made a conscious choice to allocate the resources to make this program work.

“Access UVa has the added benefit of allowing students the freedom to pursue graduate study or public-service careers after their undergraduate careers are completed, without the kind of burdensome debt that might otherwise limit their options.”

At its Feb. 6 meeting, the Board of Visitors committed $16 million annually for the program, parts of which will unfold over the next four years, to ease the debt burden of undergraduate students.

At a board meeting in October, after the announcement of the University of North Carolina-Chapel Hill’s “Carolina Covenant” plan, Casteen had challenged the University’s financial aid staff to create a new program tailored to the needs of U.Va. students. The program he envisioned would not only keep a U.Va. education affordable for the lowest-income students, but also address the concerns of middle-income families that increasingly have been squeezed by rising tuitions resulting from decreased state support.

Access UVa’s combination of loan-free packages for low-income students, caps on loans for all other students, and commitment to meet 100 percent of need is believed to be the most comprehensive program at any public university, said Yvonne Hubbard, director of the Office of Student Financial Services and one of the program’s architects. “This is a plan that looks at all of our students on aid, at all income levels.”

Currently, a quarter of U.Va. undergraduates, approximately 600 students per class, receive need-based loans. Upon graduation, the average debt load of those students is $13,500. That’s below the national average of $16,200 at public universities and $18,500 at private universities.

Still, approximately 200 members of last year’s graduating class had each accumulated debt of more than $13,500. Of those, almost 100 students graduated with need-based loan debt between $14,000 and $20,000, while another 50 graduated with between $20,000 and $30,000, according to the Office of Student Financial Services.

“Every University educator could recount stories of students whose choices are limited by financial constraints, who have made choices which were designed to limit their debt or reduce their financial obligations,” such as forgoing the chance to study abroad or take summer school courses, or accepting higher-paying but less satisfying jobs after graduation, Hubbard said.

“Equal access is not only about access to higher education, but access to all the component parts of that education, and of the choices and opportunities inherent in the culmination of that education.”

Dean of Admission John A. Blackburn predicts that the new opportunities offered by Access UVa will help the University attract a diverse pool of applicants.

“My sense is that some very talented students do not even apply to U.Va. because they think they cannot afford it,” he said. “I hope that the word will get out to students all over the nation that they can seriously consider U.Va. in their college plans.”

The cost of the program will be phased in over a number of years, drawing an additional $2.1 million from tuition revenue and private resources this fall and $7 million by the time of full implementation in the 2008-09 academic year, said Yoke San Reynolds, vice president for finance. At that time, the University anticipates spending $16.44 million annually of institutional funds on need-based grants for undergraduates. This is in addition to $4 million of endowment and gift resources already committed to need-based aid.

How the New Financial Aid Plan Works

1 Replacing need-based loans with grants in the financial aid packages of low-income students. Beginning this fall, U.Va. will replace all need-based loans with grants in the financial-aid packages of low-income students — those whose family income is equivalent to 150 percent of the federal poverty line or less. In 2003, the federal poverty line for a family of four was $18,400; for a family of four at 150 percent of the federal poverty line, family income was $27,600.

National studies show that students from low-income families are more likely to default over time and are less likely to receive assistance from their families to pay off loans, according to analysis from the U.Va. Office of Student Financial Services.

The no-loan financial aid packages apply only to a student’s first eight semesters at the University, not including summer school, which has its own financial aid programs.

2 Capping the amount of need-based loans offered to any student. U.Va. will cap the maximum amount of need-based loans for all students — in-state or out-of-state — at approximately 25 percent of the anticipated four-year cost of attendance for an in-state student, and will meet all need above that amount with grants. The cost-of-attendance figure includes tuition and fees, books and supplies, housing, meals and personal expenses, and is currently calculated as $14,520 for the current school year.

The cap will be phased in with each entering class, beginning in the fall of 2005, until it becomes fully implemented in the 2008-09 academic year.

The loan caps apply only to a student’s first eight semesters at the University, not including summer school, which has its own financial aid programs.

3 Meeting 100 percent of demonstrated need for all undergraduate students. This fall will mark the completion of a program launched three years ago to offer financial aid packages that meet 100 percent of the need for all undergraduate students who qualify for some form of financial assistance.

In 1985, the University committed to meeting 100 percent of the need of high-need students. As a result, U.Va. traditionally has received high marks for affordability in national surveys. U.S. News & World Report ranks U.Va. No. 1 among public institutions and No. 13 among all national universities in its Best Values category, a distinction that includes calculations of need-based aid, average cost after need-based grants and average discount from total cost.

Under the Access UVa plan, students accepted for admission — in a completely need-blind process — complete the standard Free Application for Federal Student Aid. Using a standard federal formula, the University’s Office of Student Financial Services calculates each student’s expected family contribution. That amount is then subtracted from the total cost of attending U.Va. The resulting sum is the student’s demonstrated need.

Student Financial Services will then offer any student with financial need, who is not low-income, a combination of grants and loans equivalent to that amount. The commitment to meet 100 percent of need applies only to a student’s first eight semesters, not including summer school, which has its own financial aid programs.

4 Counseling on college financing and debt management. Many families — low-income families in particular — find the financial aid application process daunting. Each year, a number of students either do not complete the application accurately or on time, or do not apply at all.

Under Access UVa, the Office of Student Financial Services will add staff to offer additional one-on-one counseling to matriculating students and their families, assisting them in the financial aid application process and presenting them with financial options outside of need-based financial aid. “I think this is one of the most exciting parts of Access UVa,” said Yvonne Hubbard, director of the Office of Financial Student Services. “People simply don’t know what other options are available to them.”