Iowa regents approve replacing tuition set-aside with new funding

$39.5 million to launch new program for needy Iowa students

Diane Heldt
Published: October 25 2012 | 12:11 pm - Updated: 1 April 2014 | 2:31 am in
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IOWA CITY -- The fundraising arms at Iowa's three public universities are being encouraged to raise $200 million to replace some of the student financial aid money for in-state students that's now provided through the tuition set-aside program.

The state Board of Regents, during a meeting Thursday in Iowa City, approved a plan to phase-out the tuition set-aside program and replace those aid dollars for resident undergraduate students with state funding and increased private fundraising by the university foundations. The board unanimously approved the plan, with Regent David Miles absent.

But it's important the fundraising goals for each university be realistic targets, Regent Bob Downer of Iowa City said. He said he has "serious concern" about a $58 million suggested target for the University of Northern Iowa, given that much of its alumni base has historically been school teachers, who tend not to have high incomes.

"I think it's important that we not set targets that are unrealistic, particularly in their case," Downer said.

Regents leaders said the $200 million total is a suggestion they hope the foundations adopt as a goal in helping to replace tuition set-aside, a program that drew fire last spring from some legislators and parents who didn't like the practice of using tuition revenues as a source for student aid.

"We really want the foundations to focus on that target," Regents President Craig Lang of Brooklyn said.

The University of Iowa, Iowa State University and UNI awarded $38 million in need-based aid to 14,083 resident undergraduates in 2011-12 through tuition set-aside. The regents want to replace that money by asking the 2013 Legislature for $39.5 million to launch a state-funded aid program for needy Iowa undergraduates.

To replace the merit-based scholarships the universities give to resident undergraduates, which totaled about $8.5 million last year, the regents call for increased fundraising by the university foundations. The level of university endowments needed to generate that same amount of support for merit aid is $200 million at the three universities, officials said. Obviously, regent leaders said, it will take time to build endowments up.

If the state provides the $39.5 million to establish an aid program for in-need undergraduates, the regents would reduce resident undergraduate tuition at the universities by that amount in the following year. That would result in a one-time tuition reduction of about $1,000 per resident student in fall 2014, if the regents get the state funding this spring session, officials said.

The regents also hope to reduce tuition commensurate with the amounts raised for scholarships by the university foundations, Lang and board President Pro Tem Bruce Rastetter of Alden said, though that exact amount is unknown at this time.

The university presidents said they have set goals to raise additional money for scholarships. The UI's new campaign includes $135 million targeted for undergraduate aid, President Sally Mason said, including a new program called "Golden Pledge," which will match the payout from any new, privately funded endowed scholarships of $100,000 or more through 2017.

ISU President Steve Leath said officials want to raise at least $150 million in a student support initiative, and UNI President Ben Allen said UNI aims to raise about $60 million for scholarship support.

ISU Government of the Student Body President Jared Knight asked the regents for more clarification about how the phase-out of tuition set-aside will impact nonresident undergraduates and graduate students, since discussion of the plan thus far has focused on in-state undergraduates.

Lang said the plan would continue to take some of the tuition revenues from out-of-state students to be used as "discretionary funding," essentially to be redistributed in the form of grants to other out-of-state students. The goal is not to see aid reduced to any students under this change, Lang said.

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