The State of New York recently passed major legislation that will provide free tuition at public universities to in-state residents who make less than $125,000. The grant, known as the Excelsior Scholarship, is only available to in-state NY residents and covers tuition only.

 

Still, the measure adds strong momentum to the trend towards free college tuition. This has been a hot topic since the 2016 presidential campaign, when it served as a cornerstone first to the Bernie Sanders Campaign and later as part of the Democratic Party platform.

 

Other states, notably Oregon and Tennessee, offer free college tuition to community college students.

 

What makes New York’s policy on free tuition, called the Excelsior Scholarship, groundbreaking?

 

New York’s policy is groundbreaking in that it extends free tuition to the 4 year university.

 

Spearheaded by NY Governor Andrew Cuomo, this bold initiative will provide much-needed assistance (and hope) to a segment of the population who otherwise may have thought that a college education was beyond their reach.

 

Families earning less than $100,000 will be eligible for the upcoming fall semester; the income threshold will increase to $110,000 in Fall 2018, and then $125,000 in 2019 and beyond. As a last-dollar scholarship, the Excelsior Scholarship will be used after federal and other state aid has been applied (and fingers crossed will not be used to displace Institutional grants/scholarships that you may otherwise have received).

 

Note that the scholarship covers tuition only as opposed to full Cost of Attendance (COA). In other words, students must still pay for room and board and other expenses.

 

Sounds great, right? Who can complain about free college tuition?

 

Before we get all negative and poke holes, it’s appropriate to praise the vision and initiative of Gov. Cuomo. To paraphrase his speech announcing the passage of the bill, the State of NY acknowledges a college education as a critical requirement for future success, much like a high school diploma has been viewed in this country for over 100 years.  

 

Throughout the nation, public high school is available for free, funded by local taxpayer dollars.  NY has extended this to college, so that America can compete in the 21st century. To fund the effort the State of NY has appropriate $87 million for the first year, enough to cover an estimated 22,000 students.

 

With this new law in place, more students will have access to a college degree and a better future. Expect other states to follow New York’s lead, with some modification here and there.

 

However, do NOT expect the federal government to insert itself in the free college conversation – at least not for several years.

 

But, alas, there will be unintended consequences that are worth mentioning and dissecting.

 

What are the consequences of the Excelsior Scholarship?

 

For starters, students who receive Excelsior will be required to earn 30 credits per year.  That’s a full course load of 15 credits per semester (often 5 classes), a measure designed to encourage students to finish in 4 years.  

 

Thus, the part time student who may be waiting tables or delivering pizza while in school will be ineligible for Excelsior.  In addition, many (ok, most) students find that 15 credits over 8 semesters is excessive and will diminish performance, which means that free tuition can come with a high (and hidden) cost. To keep their scholarship some students may opt for an easier concentration or major of study.  

 

We wrote many years ago about similar unintended consequences of the Bright Futures scholarship in FL, a scholarship designed to keep high achieving STEM majors in-state. Instead, according to research from FSU Professor Shouping Hu, many students who began their college career as STEM majors were switching to easier majors in order to keep their scholarship.

 

I suspect we’ll see a similar trend in NY as students opt for easier areas of study in order to continue to qualify for their scholarship benefit.

 

Perhaps the most controversial element to the NY law is the requirement for scholarship recipients to remain in state after graduation for an equivalent number of years that the scholarship was awarded.  

 

So, a 2-year Excelsior Scholar must remain in NY for 2 years after college, and a 4-year scholar must remain for 4 years.  

 

As Gov. Cuomo told the NY Post, “Why should New Yorkers pay for your college education and then you pick up and move to California?” Should a student leave NY, the scholarship reverts to a loan!

 

Limiting the mobility of recent graduates will benefit NY employers who will have a greater applicant pool, but the denial of opportunity to students who may find higher paying jobs elsewhere could affect them for the remainder of their careers.  

 

A starting salary often can impact future earnings, as research has shown. Granted, NY offers high starting salaries in areas like finance, but such a restriction limits freedom of movement, which has been a critical success factor to US economic growth since our founding.

 

Finally, as with any legislative initiative, the scholarship program is subject to political and economic externalities that are virtually impossible to predict.  

 

Case in point: as mentioned, NY has appropriated $87 million for the first year, and $163 million for the first 3 years. This may not be enough to meet demand. If that happens, then the law authorizes the state to institute a lottery to allocate scholarships. Imagine that?

 

In Florida, the state lottery provides the funding for our Bright Futures scholarship, which has contributed $5 billion to send 750,000 students to state universities. In NY, it’s possible that the scholarship will be distributed by way of a lottery.  Hmm.

 

NY and Gov. Cuomo deserve praise for their vision, their ambition, and their commitment in providing access to a college degree to thousands of NY students. Thousands will benefit, and lives will be changed for the better. After all, we often say when new, multi-million-dollar stadiums are built that the money could have been spent on education. Good for NY for making higher education a priority.

 

We know anecdotally and through research that a properly educated, high-tech workforce can fuel a community.  

 

A steady pipeline of skilled technical employees keep and attract businesses. Our students need to become them. Our schools need to grow them. Still, there are flaws to the NY legislation that should not be overlooked by legislators from other states who wish to implement similar programs.

 

We support free tuition. We’ve dedicated 10+ years to making college more affordable for all families.

 

If colleges can reduce costs through additional scholarship or grants then that’s a good thing. But families should not depend on government to make college more affordable. Students and parents can take specific actions to shave thousands off the sticker price: 66% of families pay less than full cost, with the average discount at 49%.

 

We’ve helped over 1,100 families enjoy similar results over the past decade. If you want to learn how we might be able to help yours, then visit our website www.yourcollegeconcierge.com.

 

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