For talented, low-income students, UNC promises chance to graduate debt-free

Grades weren't a factor. Hammond excelled throughout her high school years in Rutherfordton. This decision came down to one thing – money.

Frequently asked questions about financial aid in NC

Hammond says she finally turned to her mother for advice after debating her decision for almost a month. 

"She said, 'Go for it ... We'll figure it out,'" Hammond recalled of her mother's encouragement to go to Carolina, her dream school.

"That was absolutely amazing," Hammond said. "To this day, I don't know how my mom and I were going to pay for it."

The program awards eligible students – those who fall below 200 percent of the poverty standard – a combination of grants, scholarships and work-study opportunities that meet 100 percent of their financial need with no loans. Institutional and private funds make up the largest source of the money awarded to scholars.

Students do not have to apply for the program. If they are accepted to Chapel Hill and their family meets the financial criteria, they are automatically enrolled.

In comparison, the median parental income for resident undergraduates receiving need-based aid was $56,511. For nonresident undergraduates receiving need-based aid, the median parental income was $78,384. North Carolina's median household income during that same time was $46,450, according to the U.S. Census Bureau.

"Carolina wants to protect the ability of all families to get an education," said Shirley Ort, associate provost and director of scholarships and student aid at UNC-CH.

Ort says she created the program more than a decade ago with one goal in mind – "to transcend all the bureaucracy and send a really simple message: If you prepare academically and can get into Carolina, you don't need to worry about paying for it."

"I wanted to make sure young people know that they could come, even though their families didn't have money," Ort said. "When you go out into the community, especially among low-income (families), they don't understand there really is money out there. When you tell them there's money, they think it's for somebody other than them."

Navigating the world of financial aid can be overwhelming, especially for students who are the first in their families to go to college. Last school year, 54 percent of the 669 new Carolina Covenant scholars were first-generation college students, according to UNC. Since 2004, that percentage has held fairly steady and ranged from 52 percent to 58 percent.

Eve Vongchucherd, a counselor at Phoenix Academy High School in Chapel Hill and a former UNC student, knows the struggle of explaining the technical world of financial aid to families.

"A lot of my students, if you use the term 'financial aid,' they might not know what it is," she said. "What I tell any student is that money should not the deciding factor of whether or not you go to college ... because there are so many resources out there."

Those resources come in different forms. Financial aid can come from federal, state and private sources in the form of grants, loans, scholarships and work-study opportunities.

Records show 135,420 undergraduate students in the University of North Carolina system received about $1.69 billion in student aid during the 2012-13 school year – or an average of $12,475 per student.

On the Chapel Hill campus, the average student graduated with $16,150 in student loans in 2012-13. The cumulative debt burden for students was $685 less in 2012-13 than a decade ago, when adjusted for inflation, according to UNC.

Among the challenges, according to UNC, is the sustained rise in needy students and flat funding from the state and federal governments for aid.

Data from UNC's Office of Scholarships and Student Aid shows that, while the total aid awarded to all students has gone up over the past decade – from $160.1 million in 2002-03 to $400.3 million in 2012-13 – federal and state contributions have gone down while institutional and private funds have gone up.

Ort says fewer tax revenues at the federal and state level have caused UNC to be "ambitious about trying to generate new gifts."

The previous year, UNC-CH reserved 38 percent for financial aid, according to the school.

The Board of Governors' policy change in August was in addition to a new, four-year tuition plan that caps annual tuition increases at 5 percent, which is lower than the 6.5 percent cap approved in the previous four-year plan.

"Board member W. G. Champion Mitchell said limiting the amount of money reserved for financial aid, along with the 5 percent tuition cap, is part of the board’s overall goal for curbing the rate of tuition growth," according to University Gazette.

How the new cap could affect the Carolina Covenant program is still unknown, but UNC leaders say they are committed to the program.

"I have assurances (that) this is an institutional commitment, and it's one we take pride in and honor," Ort said.

That's welcome news to Hammond, who says her mother might not have been able to afford to send her to UNC without the program.

"How we would have figured it out, I have no idea," she said. "I would have still been in debt ... It's the reason I got to enjoy Carolina without worrying about the money."

Hammond now works for Central Carolina Community College, where she's a lead career and college advisor, and says she hopes to return to Carolina someday and help other students.

"I would love to go back to Carolina and get my PhD in education," she said. "I see myself continuing down a path to helping students reach their college goals."

It's stories like that, Ort says, that make her grateful that UNC has supported Carolina Covenant.

"When we started the program, we all thought it was a public service," Ort said. "What we have learned is it has benefited us. We have a much better understanding of the struggles faced by students ... It changed us, not just them."