New York Takes the First Dive into Free Tuition

by Watson Scott Swail, President & CEO, Educational Policy Institute

On Friday, the State of New York announced that it would provide free tuition to families earning less than $125,000. The cost of the program is budgeted at $163 million/year in today’s dollars, noting that those costs will escalate in the coming years beyond the cost of tuition.

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For those who support tuition-free policies, this is a big win in their column. Student debt is often crushing for students, and the risk of going to college sometimes outweighs the benefits in the minds of students, especially first-generation, low-income students. The Excelsior Scholarship is expected to cover 940,000 New Yorkers each year. This is not insignificant.

However, there are challenges with tuition-free programs, and I have been vocal against them for several years for some very real reasons. Here is my take on New York’s Excelsior Scholarship Program, knowing that some of the details are vague at this point.

First, while Excelsior provides tuition funding for students at two- and four-year public institutions, it does not cover cost of attendance. At public institutions of higher education, the cost of room, board, books, and other fees outweigh the cost of tuition. So students and families will still be stuck with at least 50 percent of the cost of attendance (unless they are commuter students). Students will still take on loans to cover their actual cost. Funds will be set aside for e-books, but the $8 million budgeted will unlikely cover all students. Let us not negate this: covering the tuition is a hefty burden to remove from students, but they still have to cover their other costs. In the final analysis, I believe it is good to have students bear part of the responsibility for a lifelong, personal benefit. But I agree that debt must be reduced.

Excelsior also requires students to enroll in 30 credits a year or equivalent full-time status. This is a big problem because many students have trouble handling 30 credits per year, especially historically-disadvantaged students. As well, what happens when a student drops a course? Does it take them out of eligibility? Do they get left holding the burden when the state says, “sorry, but you dropped and are only at 27 credit hours. You owe us.” The program does say there is flexibility in the program, but we do not know what that looks like at this stage.

The program also has a requirement that two-year students stay in the state for at least two years following their degree and four years for four-year students. Great in theory but problematic from a program issue. The state will have to track students (perhaps through taxation system) to determine whether they are in state or out of state during that time. EPI currently conducts tracking for the US Department of Education on a Special Education program, and trust us: it is not easy tracking students after the fact. New York will need to track millions of students each year to determine whether they need to repay. Then they need to determine what needs to be repaid and how that repayment will occur. What happens if a student lives in NY but works in NJ? Does that matter? Or vis-versa? If your spouse gets a good job in a different state, do you split the family until the time period is up, or do you just pay it and move? Remember, these students will likely still have debt from cost of attendance, so they are only repaying the tuition portion.

And what happens to students that drop out regardless? What do they pay? Anything? Or not?

There are two other economic pieces to this. First, as Art Hauptman said years ago, these economic stimuli have an impact on tuition pricing and cost of attendance. What has the state done to ensure that the cost of attendance doesn’t spike up, which, in turn, would drive up the cost of the program? Do colleges now add special fees to cost of attendance to make the difference, where the COA will increase by 2-3 times inflation while tuition sits idle? And second, this stimuli will likely result in more students going to college and university. Is that actually a good thing for society? One can easily make the argument that too many students go to university-level education. How many BAs do we need? Not as many as we have, I can assure you. The true need of our society is more certificates and less-than-two-year learning opportunities, as well as more associates degrees. But not more BAs.

In the end, the Excelsior Scholarship is a last-dollar scholarship, meaning that all other grants and scholarships are put into the financial aid package before the state dollars. This is fine, expect there are a lot of private scholarship programs that also claim to be a last-dollar scholarship. So, who wins this battle of last dollar? The Gates Foundation? Rotary Club? Who?

It will be interesting to see what pressure this program puts on other states. New York did have Bernie Sanders at the unveiling, who campaigned on free tuition during his campaign. Almost two years ago I wrote a Swail Letter about Bernie’s plan. Bernie was wrong then; he remains wrong today.

Taking the bite out of student debt is not a bad thing. But New York will likely find out, much like Ireland did in the 90s and 00s, that once you have free tuition, the budgetary cost becomes a massive anchor to legislatures for eons to come. And no politician will ever be able to suggest a repeal without getting thrown out of office.

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About Educational Policy Institute

The Educational Policy Institute is a Washington, DC-based research think tank on education and the social sciences. EPI conducts evaluation and policy studies on various educational issues from Pre-K to workforce outcomes in the United States, Canada, and beyond. Visit us at educationalpolicy.org.
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