In Iowa, debt goes down as university aid goes up, but the future remains unclear as tuition increases loom

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As the total amount of financial aid awarded to students at Iowa’s public universities continues to climb, the percentages of students graduating with debt seesaws down, as does the average indebtedness of those who do leave campus owing money.

Those trends, outlined in a new Board of Regents report, are noteworthy as state and federal support for student financial aid and for the universities’ general education budgets is declining. They also come as some education experts note aid will have to continue increasing if Iowa’s public universities are going to keep raising tuition.

“This new approach to pay our bills will only work if we hold true to our values that merit meets opportunity when a smart Iowa kid, without money, can still be a Hawkeye, Cyclone or Panther,” Sen. Jeff Danielson, D-Waterloo, told The Gazette, referencing proposals to ramp up tuition — potentially at different rates – at one, two, or all the public universities.

“That’s why an effort like this must go hand in hand with additional investment in meritorious scholarships for low-income Iowans so they are not priced out of opportunities to achieve alongside their academic peers,” he said.

The new regents report, made public this week, shows University of Iowa with the lowest percent of students graduating with debt among the state’s public universities — 55 percent in the 2015-16 school year. That is down from 59 percent in 2013-14.

Iowa State University saw its percentage of graduates with debt drop from 64 percent to 62 percent. The University of Northern Iowa reported a drop from 75 percent to 70 percent.

For those who do leave campus owing money, the amount is trending down across all three campuses, although Iowa State and UNI saw slight increases in 2015-16.

The UI student’s average indebtedness was down to $26,557 from $27,304 in 2012-13. ISU’s average was $27,563 in 2015-16 compared with $29,458 three years before. And UNI’s average was $22,993 compared with $23,151 in 2012-13.

Iowa’s three public universities operate under the financial aid philosophies that federal, state, university, and private aid should be awarded to as many students as possible who qualify and meet deadlines and that students who demonstrate the most need should get the most help and priority.

Accordingly, the total amount of financial aid awarded to Iowa’s public university students continued its rise above the $1 billion mark in the 2015-16 academic year, reaching $1.03 billion — $2.9 million more, or 0.3 percent, than the previous year.

From the 2011-12 school year to 2015-16, the total student financial aid at the UI, ISU, and UNI rose $39.3 million — or 4 percent.

Credit for those increases goes to the institutions themselves, as state and federal support has fallen. Specifically, federal aid fell to $520 million in the 2015-16 year, from $562 million in 2011-12. State financial aid — already the smallest portion of public student aid — dropped to $3 million from $6 million.

“The Iowa Grant Program was the only need-based state program for public universities, but the Iowa Legislature eliminated it in 2015,” according to the regents report.

Similarly, increases in the federal Pell Grant program have not kept pace with tuition increases, the report notes.

The maximum Pell Grant a decade ago covered 70 percent of the average four-year tuition and fees. In the academic year that just ended, it covered 60 percent, according to the report.

Reductions in state support for student aid mirror recent cuts in legislative appropriations for the universities general education budgets.

Lawmakers in the session that just ended took back $20.8 million from the universities in the current budget year that ends June 30, and they agreed to further cut the institutions for the upcoming fiscal year — reducing total base allocations by an additional $9.6 million.

Those cuts prompted UI President Bruce Harreld in February to announce plans to take back millions in annually renewable non-merit and non-need-based scholarships promised to thousands of students. He later reversed that move and reinstated the committed funds after several of the affected students filed lawsuits.

But, going forward, the university ended the five scholarship programs in question – including ones, for example, that awarded aid to students whose parents, guardians or grandparents graduated from the UI.

When asked subsequently how the university is going to make up for its state funding shortfall, UI officials have said they’re relying on released flood-recovery funds, new efficiencies and anticipated savings in student aid. Specifically, the university expects to save $1.8 million via students who fail to meet minimum grade requirements to receive their scholarships.

Still, it remains unclear whether this year’s funding cuts and subsequent university decisions will reverse the trend of increasing financial aid.

According to the new board report looking at the 2015-16 term, however, the universities upped aid to their undergraduate populations by 8 percent — totaling $163.8 million. That included more than $75 million at both the UI and ISU — a 7 percent increase at Iowa State from the 2013-14 school year and a 28 percent increase during the same period at the UI.

UNI increased aid by 7 percent to $13.2 million in 2015-16, according to the board report.

The $163.8 total incorporates increases for both demonstrated need and when students did not demonstrate need. The UI reported the biggest increases in both categories, providing $52.7 million for demonstrated need in 2015-16, compared to $41.2 million in 2013-14, and $22.8 million for non-need aid in 2015-16, compared with $17.4 million two years prior.

Harreld has made clear in recent comments that, going forward, need-based aid will be the UI’s top priority.

l Comments: (319) 339-3158; vanessa.miller@thegazette.com

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