Who Pays For Student Aid?

There’s a lot of money in student aid, and the State of Iowa is trying to figure out who gets to spend it and on which students.

The state’s Board of Regents, which oversees Iowa’s three public universities — the University of Iowa, Iowa State University, and the University of Northern Iowa — created a committee Wednesday and charged it with developing a five-year plan that would seek to eliminate the use of tuition revenue for financial aid.

The idea of using tuition revenue for financial aid — a common practice among colleges and universities, particularly private, nonprofit institutions — has recently become controversial at public universities. Over the past few months, policy makers in several states have questioned the use of money generated by tuition payments to fund aid, saying it places an unfair burden on middle-class students because they may end up subsidizing other students, and have proposed various means of restricting the use of tuition dollars.

Arizona lawmakers proposed requiring all students to pay roughly $2,000 toward their education, regardless of need, an amount that could not be covered by institutional aid. Virginia Gov. Bob McDonnell proposed a cap on the percentage of tuition revenue colleges could use for financial aid. University of North Carolina system board members proposed a similar cap, and when that policy did not garner support, they proposed a tax break for families that pay tuition and do not receive aid equal to the amount that is used to fund other students.

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