The University will invest $16 million annually to meet the financial needs of lower and middle-income students as part of a new initiative to reduce undergraduate student debt after graduation, relieve financial strain on student families and ensure a more diverse community.
The financial aid plan, labeled "Access UVa," was approved by the Board of Visitors Friday and will unfold over the next four years. One component of the plan, which began with the entering Class of 2001, includes meeting 100 percent of demonstrated need for all undergraduate students, both in-state and out-of state.
Following in the footsteps of such financial aid programs as University of North Carolina-Chapel Hill's "Carolina Covenant" plan, Access UVa, both in scope and breadth, will be one of the most extensive financial aid programs among U.S. public institutions, University President John T. Casteen, III said.
"This is the most ambitious financial aid program that exists today in public education," Casteen said. "It's our way to ensure that both low and middle-income youngsters have access to the kind of programs we offer here."
Incoming first years whose family incomes fall below 150 percent of the poverty level will have all financial need-based loans replaced with scholarships.
In addition to meeting the needs of lower-income students, Access UVa will address the financial strain placed upon middle-income families, some of whom have the added burden of paying for multiple children in college.
In the face of recent rising tuition costs, the program also will limit the amount of debt a student can accumulate over the course of his or her education.
In fall 2005, the entering class will have a cap on all need-based loans in order to ensure that no student will graduate with a debt of more than one full years' worth of in-state education.
This would cap student-loan indebtedness to 25 percent of students' total cost of attendance -- currently $14,520 for in-state students.
Approximately 350 students from last year's graduating class had loan debts of over $13,500, including 50 students with debt between $20,000 and $30,000, according to the Office of Student Financial Services.
Casteen emphasized that post-graduate debt from student loans can limit a students' future educational and career decisions.
"Every U.Va. graduate will be able to make decisions freely," said Yoke San L. Reynolds, University vice president for finance.
Program costs will be phased in over the next several years, drawing from such sources as tuition revenue and endowment and gift resources.
Casteen said he believes the program will reshape the student body demographically, as a sizable portion of students from low-income families are minorities.
"We have a mechanism now to break the link between race and ethnicity and the financial opportunity of students," he said.
Student Council President Daisy Lundy, who mentioned that she has benefited personally from the University's financial aid programs, said she is excited about the potential opportunities the program could create for a broad range of students.
"I think this is a bold step the University is taking to prove its commitment to making U.Va. an inviting place to all who are qualified to attend," Lundy said.
The new initiative does not include the endorsement of work study programs as a means to repay loans while in school -- unlike UNC's "Carolina Covenant" which requires students to work on campus for 10 to 12 hours a week for grants.
According to Casteen, the few students that withdraw from the University due to academic failure typically leave during their first year.
"Part-time work works somewhat to the disadvantage of students," Casteen said. "You take three hours out of every study day and frankly that makes a difference in the way students live."
The program also will include counseling for student families that are unfamiliar with debt management and budgeting for loan repayment.
The program will be fully implemented in the 2008-09 academic year.
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