Regents plan: State funding of $39 million would replace tuition set-aside

AMES -- State regents may request $39.5 million to establish a state-funded aid program for needy Iowa students at the state's three public universities, money the board says will replace the tuition set-aside program and result in lower tuition for all in-state students.

Boosting the money raised by the university foundations for student aid also is a recommendation in the plan for replacing the tuition set-aside program at the University of Iowa, Iowa State University and the University of Northern Iowa.

The regents heard the recommendations from a board committee at a meeting in Ames today; the board won't vote on the plan for replacing the tuition set-aside funding until its October meeting.

Under the proposal, the board would request an additional legislative appropriation of $39.5 million in the 2013 session to implement a state-funded student financial aid program for Iowa's neediest undergraduates at the UI, ISU and UNI. The university foundations also would implement fundraising campaigns targeted at increasing private dollars for resident student aid, board members said.

If that state funding is acquired for the new program, the board would reduce in-state undergraduate tuition by a "rate commensurate" with the amount the state gives to start the aid program starting in 2014-15. The state funding would be a "substitute" for the aid dollars that now come through redistribution of student tuition payments, Regents President Pro Tem Bruce Rastetter said. With this move, the board would "reset the tuition clock" and lower in-state tuition with the receipt of those state dollars, he said.

That means middle income Iowa families, in addition to low-income families, would benefit from this plan, several regents said.

"This isn't only a win for students in need, but for all in-state students, if in fact it becomes possible," Regents President Craig Lang said.

A critical aspect of the board asking the state for more support, is that the universities are doing their part to participate through raising more private dollars, Rastetter said.

The board in June voted unanimously to end the use of tuition set-aside within five years, and tasked a committee with forming a plan to replace that money with funds raised by the university foundations and hopefully, regents leaders say, by state funding.

The tuition set-aside program distributed more than $144 million, or 21.3 percent of tuition revenues, in Fiscal Year 2011 to resident and nonresident undergraduate and graduate students in the form of need-based and merit-based financial aid. But the program came under fire from some legislators and parents last spring who said they weren't aware of the program and didn't feel student tuition dollars should subsidize other students, especially those from out of state.