Craig Lang

Craig Lang, president of the Iowa Board of Regents. (AP Photo/Iowa Board of Regents)

IOWA CITY, Iowa --- One year after state legislators criticized a longstanding tuition-funded scholarship program, they will be asked to financially support its replacement plan.

The Iowa Board of Regents on Thursday approved a plan that would phase out the controversial tuition set-aside program, which used a percent of tuition revenue to fund scholarships.

For the plan to work, the Iowa Legislature would have to create and fund a $39.5 million aid program designed to benefit Iowa undergraduate students at each of the three public universities. Iowa is one of only a few states that do not already have a state-funded program in place, said Diana Gonzalez, the board’s chief academic officer.

Regent Bruce Rastetter reiterated that the money would not be “new money” for the universities. Instead, Rastetter said they would have a “reset” on tuition, which would lower tuition for students, even those who don’t qualify for the state-funded program. The reset, which could amount to about $1,000 for undergraduate students, would not happen until the year following the state disbursement.

Local legislators were uncertain if the program would have the support it needed.

Sen. Jeff Danielson, D-Waterloo, said “it has been difficult to get support for additional investment in public education from the current Legislature” and added that he would only support a measure that fully funded the account. However, he added that eliminating the set-aside program does have bipartisan support.

Rep. Walt Rogers, R-Cedar Falls, couldn’t give the request his immediate approval, but said it is “something we should at least be looking at to see if, or how, it will fit into our budget plan and how we want to fund education in the state.”

The plan would also challenge university foundations to raise more than $200 million for endowments that would be used to fund merit scholarship for undergraduate resident students. At the University of Northern Iowa, that would mean raising about $58 million in new contributions. Combined the schools disbursed about $8.5 million in merit scholarships in 2012.

Regent Bob Downer expressed concern about the UNI foundation’s ability to leverage such large donations when many alumni are school teachers who are usually unable to donate hefty sums to their alma mater.

Gonzalez said in 2012 more than 26,000 students had more than $263 million in unmet need after Pell and other grants were disbursed, yet only about 14,000 student received about $38 million from the set-aside program last year.

She added that the board of regents office each year would be responsible for calculating the total unmet need at each university. The university will then have to follow federal guidelines to disburse the funds.

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