Too generous for the times? UVA scraps no-debt commitment for low income students

The University of Virginia. Photo:  Dan Addison/UVA Public Affairs The University of Virginia. Photo: Dan Addison/UVA Public Affairs

For the first time since the 2004 launch of AccessUVA, the much-lauded financial aid program, the University of Virginia is requiring lower-income students to take out loans as part of their aid packages. The decision to end the debt-free support initiative, held up as a key part of a model program and copied by institutions around the country, is a reversal that’s drawing scrutiny far beyond the Commonwealth.

When it was created nearly a decade ago, AccessUVA was one of the most generous financial aid programs ever implemented by a public university, comprised of all grants and zero loans for students from families with incomes up to 200 percent of the poverty line.

But with the dawn of the 2008 recession, resources became scant even as more people qualified for aid. AccessUVA initially cost UVA $11.5 million, said spokesman McGregor McCance. By 2012, institutional costs had ballooned to $40.5 million. In 2004, one in four UVA students qualified for some kind of financial aid, he said. Today, it’s one in three.

UVA, which along with UNC was in the vanguard of a parade of schools that poured resources into debt-free aid in the last decade, found its model pinched from both sides.

“The good news is that the program clearly and unambiguously worked,” said Terry Hartle, senior vice president of the nonprofit higher-ed advocacy group the American Council on Education. “The bad news is that it clearly and unambiguously worked.”

UVA and other institutions created powerful incentives for lower-income students to apply, he said, “and simply didn’t anticipate that it would double the enrollment of the target group.”

The solution put forward by UVA administrators and adopted by the Board of Visitors August 3 requires low-income out-of-state students receiving financial aid to cover the first $7,000 of their need with federal loans. Their total four-year debt will be capped at $28,000; for in-state students, the cap is $14,000. The change will save the University $6 million per year when it’s fully implemented in 2018, by which time it will affect about 1,375 students.

Former Rector Helen Dragas—along with Kevin Fay, the only two members of the Board of Visitors to vote no on the change—told administrators at the meeting that as she saw it, requiring students least equipped to easily pay back debts to take out loans meant AccessUVA was no longer fulfilling its state purpose of meeting 100 percent of student financial aid.

Chief Operating Officer Pat Hogan disagreed, pointing out that loans have been part of meeting student need at UVA since AccessUVA launched. “The thrust of this program and the majority of the program have not changed,” he said. “All we’re doing is replacing grant money with loan money in certain situations that allow us to continue to provide aid to all students.”

UVA’s contribution to financial aid will keep going up, Hogan said, as it steers 15 percent of tuition revenues into AccessUVA. UVA is holding onto its need-blind admissions process, which he said sets it apart among other public institutions, and it still offers a great education at a great price—the best, in fact, according to the Princeton Review’s “Best Value Colleges for 2013” rankings, which put UVA in the number one slot last week.

In order to keep the program sustainable, he said, “we just have to make sure…we’re being fair with all students around a proper balance between grants and other resources that students might have available to them.”

While UVA’s debt-free-for-some plan helped set the bar for public higher ed financial aid programs in the last decade, not every state university followed its lead. Susan Fischer, director of the University of Wisconsin Madison’s Student Financial Aid program, said UW considered the idea several times, and each time rejected it.

“We knew we couldn’t sustain it,” Fischer said, partly because UW relies more heavily than UVA on rapidly diminishing federal funds in its financial aid packages.

But the problem is the same everywhere, she said: There are more people with fewer resources clamoring for a good education—and less money available to help them. And while nobody wants to add to the country’s $1 trillion student debt load, schools are being forced to take a hard look at just how much cost they can cover.

“Everyone wants a simple answer to a very complicated problem,” she said.

UVA is not alone in rolling back its commitment to zero loans. A number of elite private schools that instituted no-loan policies for all students receiving financial aid in the last decade, including Cornell and Yale, have started requiring some students to take on debt.

Hartle said UVA still offers a quality education at a comparatively low cost, and while he called the changes “disappointing,” he said the movement the University helped start revealed an important truth about higher education.

“If we can make post-secondary education affordable for students from lower- and middle-income families, they will participate, even at the most highly selective institutions,” he said.

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