Four universities in the state are part of NC Promise, an initiative that allows in-state students to pay only $500 per semester for tuition.
It includes two Historically Black Colleges and Universities: Elizabeth City State and Fayetteville State; one Historically American Indian University: UNC Pembroke; and the westernmost institution in the UNC System: Western Carolina University.
Since starting in 2018, the program has led to significant enrollment gains for each of the universities.
In comparing the university’s enrollment before they were part of NC Promise to this year’s, ECSU’s has jumped 57%, FSU’s 10%, and WCU 8%. UNCP’s enrollment has been on a downturn since 2021, but it enrolled its largest freshman class the year it joined NC Promise.
But those enrollment boosts could come at more of a cost this year.
The difference between the $500 per semester for tuition and the actual cost to educate each student is made up by taxpayer dollars. The state legislature “buys down” the difference between the university’s regular tuition rates and NC Promise rates.
This rate varies — the lowest being $1,856 dollars per in-state student and the highest $11,855 per out-of-state student. Nonresidents don’t have the same rate as in-state students and are charged $2,500 per semester.
The state already approved a recurring annual $82.5 million appropriation for the four schools. But according to Jennifer Haygood, the UNC System’s Chief Financial Officer, that likely won’t be enough to cover the school’s full cost.
Currently, Haygood’s office is projecting a $6.4 million funding deficit.
“We don’t have enough adequate funding this fiscal year to fund all anticipated enrollments,” Haygood told the UNC Board of Governors’ budget and finance committee. “... If we want to ensure that our NC Promise institutions are not negatively disadvantaged, we need to begin thinking about how we handle that.”
This isn’t the first year the state legislature’s funding wasn’t enough to cover the NC Promise initiative. Last year, the funding only covered 87% of the buydown rate by the universities’ summer semesters.
Haygood said there’s only been three years when there was enough funding to cover all NC Promise enrollments.
When the initiative was first introduced, critics felt the state eventually wouldn't provide enough funding for NC Promise institutions. In other states, Promise programs are being shut down due to uncertain funding.
At the UNC Board of Governors meeting Thursday, Haygood proposed two options to “fully fund” NC Promise. One is to increase the tuition paid by students, especially for those from out-of-state.
“The amount that we are allocating for non-residents has actually grown more quickly than, in percentage terms, the enrollment increase,” Haygood said.
At the beginning of the program, about 26% of NC Promise’s funding was allocated to out-of-state students. Now, that figure has jumped to 45%.
Haygood’s proposal showed that if each out-of-state student paid $100 more in tuition, that could add up to $375,000. And if it was increased for every student, $2.35 million.
It would take NC Promise institutions four years to see the full benefit of any tuition increase for resident students, due to the UNC System’s guarantee tuition program. This mandates that in-state students have the same tuition rate all four years they are in school. There is not a guarantee for out-of-state students, so any increases would be in effect immediately.
Haygood said the “obvious” option to “fully fund” NC Promise would be the BOG asking the state legislature for more funding. She estimated that if the buydown rate increased by 1%, it could increase the allocation by $900,000.
At the meeting, UNC BOG member John Fraley asked why the General Assembly didn’t allocate more funding back when Fayetteville State was added in 2022.
“When this was first starting up, there was a presentation made back to the legislature projecting out that the buy down over a certain number of years was going to hit either $81 million or $84 million,” Fraley said. “That’s also before Fayetteville State was included. I don’t understand why we have a shortfall now.”
Haygood said in 2020, the General Assembly originally intended to fund NC Promise up to $81.4 million.
“To your point, that was before the inclusion of FSU,” Haygood said. “The reason we have a shortfall now is because we’ve had some enrollment growth and that has outstripped sort of expectations.”
This year, FSU will receive $15.4 million from the $82.5 million funding pool. When the HBCU was first added to the program, the state legislature increased the overall NC Promise allocation by only $11.5 million.
“So, you can already see how the enrollment growth and the participation in NC Promise at FSU has outstripped even the funding that the General Assembly initially provided,” Haygood said at the meeting.
FSU’s funding is on the lower end of the allocations. Western Carolina will receive $38.4 million and UNC Pembroke $16.1 million. The smallest allocation, 8.7 million, will go to Elizabeth City State. These allocations don’t include the school’s summer enrollment, which is when Haygood expects the shortfall to occur.
UNC BOG member Harry Brown said he doesn’t think requesting the increase will be a problem.
“I know on the Senate side, the intent is to always fund it and I think that will take place,” Brown said at the Thursday meeting. “I think it’s just a matter of asking at this point.”
The UNC Board of Governors’ budget and finance committee will continue to discuss NC Promise’s funding over the next few months.
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