Higher education

University of Iowa notifying thousands of financial aid cuts

Five scholarship programs being eliminated to save money

The Old Capitol Building between Schaeffer Hall (left) and Macbride Hall (right) on the Pentacrest on campus of the University of Iowa in Iowa City on Wednesday, April 30, 2014. (Stephen Mally/The Gazette-KCRG TV9)
The Old Capitol Building between Schaeffer Hall (left) and Macbride Hall (right) on the Pentacrest on campus of the University of Iowa in Iowa City on Wednesday, April 30, 2014. (Stephen Mally/The Gazette-KCRG TV9)

The University of Iowa on Wednesday notified 2,440 students receiving scholarships they won’t be getting the money they’re expecting in the next academic year.

Those being notified are resident undergraduate students receiving non-merit- and non-need-based aid from a handful of scholarship programs the university is cutting in response to an $8 million takeback in state appropriations in the current budget year.

Dropping the programs — which could affect recipients beyond next year — is expected to save the university $4.3 million.

“It will be a surprise, but it shouldn’t be a complete surprise because we had language saying for this scholarship, if things change, we will let you know,” UI President Bruce Harreld told The Gazette after he alerted lawmakers Wednesday about the financial aid cuts. “And here, we’re letting you know six months ahead of time.”

Read more: Iowa House Speaker rips University of Iowa scholarship cut

Lawmakers in December agreed to slash $18 million from funds already allocated to Board of Regents universities for their 2017 budgets as part of a $117.8 million de-appropriation in response to budget shortfalls. The reduction took $8 million each from UI and Iowa State University and $2 million from University of Northern Iowa — and they were cuts to the universities’ base state funding, meaning the fallout could stretch years into the future.

Officials at each university have spent weeks combing through budgets to find ways to absorb the losses, and Harreld told lawmakers Wednesday UI has saved millions by implementing efficiencies, conducting a line-by-line review of its budget and launching a larger study to review the university’s overall structure.

Still, he said, the cuts in student aid are necessary at this time.

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“It is with great disappointment that I share this news,” Harreld wrote in the letter that went to the thousands of affected students. “Please know that the elimination of this program in no way diminishes your admirable academic accomplishments. Unfortunately, because of a shortfall in state revenues, the Iowa Legislature decreased funding to the University of Iowa by $8 million. This devastating cut has forced us to consider every expenditure and its contribution to our core educational mission of education, research and discovery.”

Scholarships cut

Affected scholarships are:

— Iowa Heritage Award — for full-time, first-year students who have a parent, stepparent, legal guardian or grandparent who graduated from UI with a bachelor’s, master’s or doctoral degree. It’s valued at $6,000 or $1,500 a year for four years.

— Iowa Heritage Transfer Award — for full-time transfer students with a parent, stepparent, guardian, or grandparent graduate. It’s worth $1,500 a year.

— President’s Heritage Award — for students who meet both the legacy criteria and apply for the Presidential Scholarship, the university’s top scholarship for first-year students. Its valued at $6,000 or $1,500 a year for four years.

— Iowa Community College 2+2 Scholarship — for students transferring directly to UI from an Iowa community college who are enrolled in a 2+2 guaranteed graduation plan. It’s worth $2,000 or $1,000 a year for two years.

— Community College Academic Scholarship — for high-achieving community college transfer students. It’s worth between $200 and $6,000.

According to the Board of Regents’ most recent financial aid report, about 7,000 students received and accepted financial aid in the 2014-2015 year — not including, for example, institutional employment.

Harreld stressed to lawmakers during Wednesday’s legislative education appropriations subcommittee meeting, 44 percent of undergraduate students last year earned a degree without incurring any debt. For those who did graduate with debt, the average total load was $27,415 — just $12,385 of which was classified as need-based.

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Harreld told lawmakers the university is committed to re-evaluating the scholarships it’s cutting in the future — if budgets stabilize.

Tuition-increase proposal

He stressed the need for cooperation in doing that, urging the state to up its support, specifically through 2 percent funding increases in the next two budget years, and the Board of Regents to allow more tuition increases.

During Wednesday’s meeting, Harreld showed slides indicating UI has the cheapest resident tuition and fees among its peer group, which includes the universities of Illinois, Michigan, California-Los Angeles and Texas. If, he said, UI raised its rates to the average of its peers, the institution would bring in another $91 million.

And, Harreld said, he hopes UI can do just that — promising to commit any additional state funding for its general education budget, over the current year’s $224 million level, toward resident student aid if the university can increase tuition up to the average of its peers over the next five years.

“If we could compete nationally with the cheapest tuition, we would do it,” he said. “But we can’t.”

Specifics of Harreld’s tuition-increase proposal includes for the 2018 budget year a $171 increase for resident undergraduate students, a $715 increase for non-resident undergraduate students, and varying increases for students in more expensive programs or at the professional level.

Between the 2019 and 2022 budget years, Harreld’s proposed tuition increases include a $784 hike for resident undergraduates, a $1,119 bump for non-resident undergraduates, and varying increases for students in other programs.

Cutting costs

Having harped on the state’s role in driving higher education success — through annual appropriations — and the role of the regents, which approves tuition rates, Harreld noted specific results of his university’s efforts to improve efficiencies and cut costs.

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As of December, he said, the university has saved $4.5 million through efficiencies in the areas of information technology, shared services, and procurement. The university also has redirected $2.5 million of employee effort “from administrative tasks to the core functions of teaching and research,” Harreld reported.

The university expects to save another $4.5 million by the end of the 2018 budget year, he said, adding that Iowa’s administrative overhead is nearly 2 percentage points below the average of its national peers — 6.1 percent compared to 8.2 percent.

Harreld acknowledged budget constraints facing lawmakers. That, he said, is why the state and universities need to work together on economic development opportunities.

Specially, Harreld mentioned a lack of clarity around how state law enables public universities to invest earnings in private startup companies, “which license technology from regents institutions and/or spin out of regent institutions-related research and development efforts.” He also cited challenges in working with private companies, due to difficulties protecting their trade secrets.

“At the end of the day, the more we can do to actually build our own economic engine and become less dependent on state resources is a really wise strategy for all of us,” he said.

The better partners the state, regents and universities become, according to Harreld, the more likely, “We also will chart a new course in allowing ourselves to leverage the assets we’re sitting on at our wonderful university.”

Text of the letter to students

February 22, 2017

${toName}  
${address} 

Dear ${STANDARD_FIRST_NAME},

The University of Iowa has served the State of Iowa for over 150 years by providing an exceptional education to our students. Throughout our proud history, we have worked relentlessly to make the Hawkeye educational experience accessible to all.  Recent reductions in state support have forced us to make difficult decisions about how we will maintain our academic quality and affordable tuition.  Consequently, we have determined that, effective fall 2017, the ${AWARD} which you were awarded will be discontinued.

It is with great disappointment that I share this news.  Please know that the elimination of this program in no way diminishes your admirable academic accomplishments.  Unfortunately, because of a shortfall in state revenues, the Iowa Legislature decreased funding to the University of Iowa by eight million dollars. This devastating cut has forced us to consider every expenditure and its contribution to our core educational mission of education, research and discovery.

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With our commitment to academic excellence guiding us, we dedicated the past 12 months to reviewing our budget line by line. The process highlighted opportunities that require reinvesting in our core programs and strengths.  Ultimately, these investments will result in a superior academic experience for our students and greater success following graduation. 

Still, we understand and are empathetic to the hardship the immediate loss of the ${AWARD} places upon you and your family. If you completed the 2017-2018 Free Application for Federal Financial Aid (FAFSA), the UI Office of Student Financial Aid will be revising your award notification. You will soon be receiving an email notifying you of your award changes. We pledge to continue to operate as efficiently as possible to ensure a world-class education at an affordable price, honoring the University of Iowa legacy.

Sincerely,

Bruce Harreld

President

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