Cuomo’s College Plan: ‘Free’ But At a Cost

By: Alex Benedict

While it is a step in the right direction, New York’s free tuition plan has some wrinkles to be ironed out.

In January of this year, New York Governor Andrew Cuomo introduced a program to allow middle class students to attend two and four-year public colleges within the state for free. The Excelsior Scholarship, which was finalized by the state house and senate in April, will allow 940,000 middle-class families the opportunity to further their education. Starting in the fall of 2017, participants have the ability to attend a City University of New York (CUNY) or State University of New York (SUNY) “free” of charge.

The Excelsior Scholarship is the nation’s first accessible college program with a four-year option, and it has the potential to inspire other states to follow depending on the economic effects of the program. These effects will be realized once the plan is completely phased in and the first participants of the program graduate from their universities. The plan’s specifications include that any recipient of the scholarship must remain in New York to work after their graduation for the same number of years that they had received funding. The scholarship also puts a cap on how much a family can make annually; in 2017, the family must not earn over $100,000, but by the end of the phasing in 2019, that number will increase to $125,000.

Another requirement is that the recipient must attend school full-time, or take more than 12 credits, and be on track to graduate without delay. Just this semester at LaGuardia Community College in New York City, full-time enrollment has increased 5.25%, emphasizing the national trend to get students to take more than 12 credits per semester. Research has proven that students who take more than 12 credits per semester are more likely to graduate on time.

Defining ‘free’

While the program has honorable intentions, some of its requirements prevent lower-income students from participating. Oftentimes potential participants from the lower class cannot be full-time students because of the need to work, and the expenses that these students would mostly need help with–food, housing, books, and other living expenses–are not covered by the program. Contrary to how it is popularly known, the program doesn’t actually provide completely free college for its participants. Instead, known as a “last dollar” program, it covers the tuition that financial aid doesn’t.

Not hitting its mark

The cost of college—both public and private universities—has been on the rise since 1980, when it cost around $5,000 to attend a four-year private institution and half of that to attend a public school. In 2010, it was more than $35,000 for tuition alone at a private university, and around $15,000 for a public one. In the seven years since then, these figures have increased even further, $49,000 and $24,000 for private and public college educations, respectively.

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Image courtesy of FeelTheBern.org.

Matthew Chingos, an economist at the Urban Institute, argues that the plan won’t help the potential students who need it the most. Instead, it will most benefit those whose families make too much to receive federal grants, but not still less than the cutoff for the Excelsior Scholarship. But the people who have historically needed help the most are those in the lower-class, or whose families make less than $40,000 per year.

Chingos also said that the plan could increase the competitiveness of SUNY and CUNY schools. While the program will increase the number of college attendees, it could also decrease the acceptance rate, as those who benefit most from Cuomo’s plan come from the higher end of the monetary spectrum.

Private becomes less prestigious

The average private university charges upward of $45,000 per year solely for tuition and room and board. Though this number has drastically increased over the past decade, private institutions are already forced to offer large amounts of financial aid to their students. As a result, two to three colleges close on average every year and this number is expected to increase since there is no way for private institutions to financially compete with minimally expensive state and city universities. Analysts of higher education believe that attendance at private universities will drastically decrease by the time this plan is completely phased in, stating that students will opt to go to public universities instead.

Many experts also believe that this trend towards implementing free tuition nationally will have a negative effect on the bond market, specifically those issued by these private institutions. But Mike Kantrowitz, expert on college financial aid and the president of consulting company Cerebly, Inc., said that the new program wouldn’t cause any private school to close its doors. He instead believes that private acceptance rates would increase, making them less competitive in order to keep enrollment up.

In March of 2017, The Commission on Independent Colleges and Universities (CICU) in New York published a report on the effects of the Excelsior Scholarship. The report stated that private universities could take a hit on their enrollment by 11%, equating to $1.4 billion lost in tuition. Yet, more prestigious and selective private universities would suffer less than those looking to create an academically and socially diverse student body.

Is staying in state worth it?

 The CICU also claims that the 11% reduction in private university enrollment would lead to a $224.3 million reduction in taxes paid to the state. It emphasized that public institutions would see enrollment increase by 16%, which would cost New York $1 billion more than projected. The report concludes that there may be far more unintended consequences and costs to the state than initially anticipated.

Recipients of the Excelsior Scholarship are also required to work in New York for the same number of years that they received the scholarship. If they break this contract, then the tuition becomes a loan that they must pay back to the state. If a student is pursuing graduate studies, they don’t have to pay back the scholarship assuming that they return to New York upon completion of their graduate degree.

Traditionally, state schools have offered lower-cost tuition to in-state residents because their tax dollars go to fund the schools. It is a tradeoff: you pay taxes to improve our colleges and universities, and they offer you lower tuition for your children. But many critics of the plan argue that it limits the opportunities for recent graduates, threatening them with debt if they choose not to stay.

What’s going to happen?

The Excelsior Scholarship is the first tuition-free program for both two- and four-year public institutions, but the idea started only for two-year programs, and is currently enacted in Arkansas, Oregon, and Rhode Island. California has even proposed a plan similar to that of New York. Each of these have stipulations like those found with New York’s plan, including the post-graduate work requirement and full-time student status.

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Image courtesy of APLU.org.

Graduates from any university, but specifically public universities, are more likely to positively impact both local economies and society as a whole. In a study by the Association of Public and Land-Grant Universities (APLU), college graduates who hold a bachelor’s degree or higher contribute $381,000 more in taxes over their lifetime than those whose highest degree is a high school diploma. The employment rate of college graduates is 24% higher and annual income is $32,000 greater than high school graduates. Tennessee, which was the first state to implement a free-college program for community colleges and technical schools, has seen a growth of 30% in its freshman class numbers since its inception in 2015.

While this data does not focus directly on the effects of recent university graduates remaining in-state post-graduation, it can be expected that with higher enrollment and higher degree completion, the economy can expect a boost as more qualified people fill jobs within the state.

Citations:

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Commission on Independent Colleges and Universities ( 2017, March ) Report: Effects and Consequences of the Excelsior Scholarship Program On Private, Not-for-Profit Colleges and Universities. The Commission on Independent Colleges & Universities in New York. Retrieved from https://www.cicu.org/sites/default/files/2017-03/Report%20-%20Effects%20and%20Consequences%20of%20the%20Excelsior%20Scholarship%20Program%20-%203-9-17.pdf.

Douglas-Gabriel, D. (2017, 8 April ).  New York could become largest state to offer tuition-free public higher education. Washington Post. Retrieved from https://www.washingtonpost.com/local/education/new-york-to-become-the-largest-state-to-offer-tuition-free-public-higher-education/2017/04/08/3fe0563a-1c8b-11e7-9887-1a5314b56a08_story.html?utm_term=.03bb0d674bb8.

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Levine, A. (2017, 13 April ). New York Today: Free College, but With Caveats. New York Times. Retrieved from https://www.nytimes.com/2017/04/13/nyregion/new-york-today-free-college-but-with-caveats.html.

Mulhere, K. (2017, 26 April). How a Harvard Economist Would Make Free Tuition Even Better. Time. Retrieved from http://time.com/money/4756428/free-college-tuition-degree-completion-matching-grant/.

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Randall, D. (2017, 23 May ). Bond market braces for impact of New York’s free tuition plan. Reuters. Retrieved from http://www.reuters.com/article/us-college-bonds/bond-market-braces-for-impact-of-new-yorks-free-tuition-plan-idUSKBN18J19C.

Smith, A. (2017, October 13). The impact of New York’s free tuition program on two community colleges. Inside Highered. Retrieved from https://www.insidehighered.com/news/2017/10/13/impact-new-yorks-free-tuition-program-two-community-colleges.

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