University of North Carolina at Chapel Hill Chancellor James Moeser announced a new plan Wednesday for low-income students that puts Carolina's financial aid policy at the national forefront of public universities.

Beginning with the Class of 2008, financial aid packages will be made available to all students whose family income is at 150 percent of the federal poverty level or less.

The financing scheme, dubbed the Carolina Covenant, will pay for all the costs of a four-year undergraduate education on the condition that participating students work on campus 10 to 12 hours per week.

The university first looked at implementing an aggressive financial aid package for low-income students three years ago--partially in response to a number of layoffs across the state--but did not have the necessary resources. The idea was brought back to the table this summer.

"It's been in the back of our minds for some time," said Shirley Ort, vice provost and director of scholarships and financial aid for UNC-Chapel Hill. "We thought how great it would be if we could put the word out so that as we were increasing tuition, we wouldn't be scaring people away."

The university projects that when the program is fully implemented, the annual cost will be at least $1.38 million. Using current financial aid dispersement patterns, the cost for the first entering class is projected to be approximately $300,000, but with a potential rise in applicants, the actual cost could be more.

According to 2002-2003 UNC-Chapel Hill demographic figures, 281 current students fall into this low-income category--89 percent in-state and 11 percent out-of-state--but Ort predicted the university would experience an increase in applicants from the low-income bracket; in fact, that is one of the aims of the new plan. Despite the anticipated increase in cost, the university will remain need-blind in its admissions process.

The low-income category was defined by using a variety of national standards. A family of four with a $28,000 income or a single parent who has one dependent with an $18,000 income are both cases that would qualify for the Carolina Covenant.

Ort said the discussion was catalyzed in part by a report by national lender Sallie Mae that demonstrated the lack of information available to low-income families about financing a college education. The university hopes that the Carolina Covenant will be a bold mechanism for getting the message out to low-income applicants about the availability of aid at Carolina.

"Our goal isn't to recruit more students [overall]," Ort said, noting the existing strain on UNC-Chapel Hill admissions by the large number of applicants. "We want this to level the playing field."

The program's development was largely internal, but external consultants--such as Anna Griswold, assistant vice provost for student aid at Pennsylvania State University at University Park--were involved in the effort to contextualize the new financial aid plan.

Griswold contributed to UNC-Chapel Hill administrators' discussion of the information gap's pervasiveness for low-income families and the stress placed on low-income students to repay debt as barriers to entering college.

"[The administration at PSU] sees the effects of unmet need or excessive borrowing for our lowest-income students," Griswold said.

"The national data confirm that the inability to give a strong and affirming message to low-income students that they can come to college without an excessive loan debt [is a deterrent]."

Griswold said that Carolina was not alone in its desire for a more progressive financial aid program. "On a national level, most public universities would certainly desire to have a comparable program. We all want that for our students," Griswold said.

Despite this enthusiasm, North Carolina is one of the more remarkable examples of state commitment to financial aid. Griswold said institutions that are not as well funded through state appropriations face a greater struggle in trying to devote financial aid to a program like the Carolina Covenant.

She added, however, "[other] institutions will take note and will look to this as a goal to strive for."