Winners (and losers) in New York’s plan to make college free

The first-in-the-nation scholarship program would serve about 1.5 million full-time students. But there are downsides.

Image credit: mihailomilovanovic/iStock

This weekend, New York state lawmakers approved legislation that will cover the full cost of tuition at public four-year colleges for certain students. The policy is the first of its kind in the nation. The Excelsior Scholarship would cover full-time students in the State University of New York and City University of New York systems, which together have more than 80 campuses serving about 1.5 million undergraduates and community college students. Funding for the scholarship will come out of the state’s budget.

Michelle Miller-Adams, a political science professor at Grand Valley State University and research fellow at the W.E. Upjohn Institute for Employment Research, has authored two books on universal, place-based scholarships. I spoke to her on Tuesday to get her perspective on the new law.

This interview has been edited for length and clarity.

Ware: What were your initial reactions after you first found out about the law?

Miller-Adams: I think it’s great that a state is providing a tuition-free scholarship for four-year colleges. There are others that are doing that same thing, but only for two-year community colleges. So, that’s the big news here. It’s also getting so much attention because it’s New York – it’s such a big state.

But I think there are a couple of issues with the program itself.

Ware: What are some of those issues?

Miller-Adams: The big thing is that the program doesn’t do anything for the poor. This is a program for the middle class because the scholarship is “last dollar.” That means that it pays the rest of students’ tuition, after other grants and scholarships are factored in.

For example, students must first use their Pell grants and any grants from New York state’s need-based tuition assistance program for low-income students. Those combined cover all the tuition of a two-year degree and almost all the cost of tuition for a four-year degree. So, low-income students will see any hardly new money from the Excelsior scholarship.

But because middle-class families aren’t eligible for Pell grants, they will benefit more from the Excelsior scholarship. A family making $50,000 to $60,000 a year is not going to be eligible for Pell grants, yet it is still going to be hard for them to afford college. So the program is good in that regard. But the lower class faces a lot of extra barriers, and this program is not going to make much of a difference for them. In an ideal world, these programs would be first-dollar programs – meaning the Excelsior money is factored in before other grants and scholarships – so that low-income students would see new money, too. But that would be a very expensive model to carry out. The state probably wouldn’t be able to afford that.

Ware: Are there other issues you have with the program?

Miller-Adams: I always get nervous when the funding comes from the legislature because the key to success for these programs is that they need to be predictable and long term. And if New York went into a budget crisis or if there were a change in leadership or if the legislature changed its mind, they could end it. That happens from time to time – programs get started and then stop. So, it would be good if they could guarantee that this program will continue.

Also, there’s a requirement that students must stay in state after getting the scholarship, or else the scholarship turns into a loan and needs to be paid back. That is a very bad idea. I know it’s a politically right thing to say, “Well, we’re giving you money, so you should stay in New York.” But if a student can’t find a job in there but can find one in New Jersey, is it in the interest of New York to keep them there without a job?

It’s also an administrative burden for the program itself to figure out who leaves, when they leave, turning the grant into a loan and attempting to collect payments – that sounds like a giant headache. You want these scholarship programs to be as simple as possible because you want people to be able to use them.

The other thing is that there’s a cutoff, so that families making $125,000 a year or more are not eligible. First off, not many wealthy families will go to these colleges. And whenever you have a cutoff like that, you can create some winners and some losers. For example, a family who earns $126,000 won’t be eligible, even though they aren’t that far off from the family who earns [just under] $125,000. The arbitrary cutoffs are a little problematic.

Ware: What implications would this scholarship have on the rest of the nation?

Miller-Adams: It’s important because we have the model of the Tennessee Promise, which only covers tuition for two-year colleges. Now we have a model for a tuition-free four-year degree. So, that’s good. I think it also keeps the free-college movement alive at a time where the federal government is not invested in it.

Now that we don’t have a federal government that’s pursing any progressive policies, we’re seeing state governments step up. We see California doing it on climate change, and now New York is doing it with college costs. A lot of policies in the U.S. start out at the local and state level and then spread out from there.

Ware: The Kalamazoo Promise, a scholarship program in Michigan that you’ve written about, is funded by anonymous donors, while funding for the New York Program comes out of the state’s budget. Which of the two models is ideal?

Miller-Adams: I think we’re moving toward a recognition that a high school diploma isn’t sufficient for success in today’s workforce. Just like high school became compulsory and publicly funded, I think it’s inevitable that, down the road, at least some college cost will be publicly funded. So, I think public funding is wonderful and ideal.

But when it comes to using education as a local economic development strategy to reinvigorate your community, I think it’s great that private money is involved because that’s money that comes from local residents. Plus, it’s hard to picture a statewide program that would be privately funded – I just don’t know that many rich people [who] would want to send everybody in their state to college. It’s much more likely that you’ll see that at the local level.

But there is a lot of unmet need even with New York’s new program, so there’s still a lot of room for philanthropy around it to help students cover books, living expenses, et cetera.

Ware: The law is estimated to cost $163 million in its first year. What kind of return do you think New York state taxpayers will get for that investment?

Miller-Adams: Our research on the Kalamazoo Promise shows that the Kalamazoo Promise yields a 11 percent rate of return. That suggests that the rate of return for the New York program is going to be very high, too. More students will be able to obtain four-year degrees, and they will be able to earn more after graduation because they will be able to get better jobs, and they will pay back some of those earnings in taxes. And that’s why they have the residency requirement.

But most New York state students stay in the state after graduating anyway, so I don’t get why they’re punishing the few who leave. I think they should continue working on the scholarship to make it better over time. Just because this is the plan they came up with now, doesn’t mean they can’t improve it.


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