New York’s Free College Plan: Benefits and Shortcomings

Many college students starting the new school year in New York will be part of a policy experiment that is being closely watched by educators, policymakers and the public. This fall semester, New York will begin offering free tuition at its two- and four-year public colleges and universities. Called the “Excelsior Scholarship,” this ambitious scholarship program has admirable goals but also several drawbacks that have stirred up controversy.

How It Works

New York’s Excelsior Scholarship covers tuition costs only—meaning that it does not include student fees, books, living expenses, or room and board. To be eligible for free tuition, students must meet several criteria: be New York residents for at least a year, earn at least 30 credits each year and remain in good academic standing, and their families cannot earn more than $100,000 annually (with the cap increasing to $125,000 by 2019). After graduation, recipients are required to live and work in New York state for as many years as they received the scholarship. If a beneficiary fails to meet these requirements, the scholarship can turn into an interest-free loan.

The scholarship is a “last-dollar” program, meaning that the state covers those tuition expenses that remain after deducting all other forms of grant aid that the student receives—such as institutional scholarships or Pell Grants. This is the same model as the recently implemented “Tennessee Promise” program—which offers Tennessee residents free tuition to in-state community colleges—with the objective of bridging the funding gap between other forms of aid and the total cost of tuition. The “last-dollar” approach improves a state’s return on investment compared to a system under which the state pays the full cost of tuition because it only covers the otherwise unfunded portion of each recipient’s tuition.

Benefits of the plan

The Excelsior Scholarship seeks to make college affordable and accessible for middle-class students, who generally do not qualify for need-based federal financial aid (such as Pell Grants). For some who would attend college anyway, the scholarship will likely reduce reliance on federal student loans. This is a welcome development given the ballooning trend of student borrowing that has reached an alarming level of $1.3 trillion in total outstanding debt nationally. It is also anticipated to encourage some New Yorkers to pursue a post-secondary education that they might otherwise have been viewed as unaffordable. Student debt can deter students from enrolling in college, and the Excelsior Scholarship is the first state legislation to offer a large-scale alternative to student loans at four-year institutions.

The plan also addresses the issue of degree completion. Currently, just 40 percent of first-time, full-time college students in the U.S. graduate within four years; just 60 percent graduate within six years. The Excelsior Scholarship’s stipulation that students earn at least 30 credits each year is expected to encourage more New York students to graduate on time. Although students who are unable to stay on track must repay the aid, the requirements are flexible to help students facing hardship, for example by allowing students to take less credits in one semester than another.

Shortcomings of the plan

Opponents contend that the Excelsior Scholarship is poorly targeted, and the scholarship merely fills tuition gaps. Because many low-income students already receive large tuition discounts from public institutions—generally from a combination of Pell Grants and aid offered by colleges—opponents say the program’s benefits will disproportionately flow to middle- and upper-middle-class students.

This plan also may not address pervasive, underlying issues that prevent broader access to the higher education system. Free tuition alone is unlikely to eliminate many of the barriers low-income and non-traditional students face in college—like balancing full-time work while attending school, or meeting childcare costs and living expenses. The Excelsior Scholarship also does not cover room and board costs, which have skyrocketed in recent years and are especially high in areas such as New York City. The plan fails to address the widespread lack of college preparedness among low-income students because it does not cover the cost of remedial classes.

These concerns point to an important trade-off: should states focus their limited resources on promoting middle-class college affordability, or working to eradicate the challenges that low-income students face in the higher education system?

Many New York students will see their college bills dramatically decline this semester, but policymakers must grapple with the trade-offs that this approach poses and the remaining barriers to widespread higher education success. Nonetheless, it is encouraging to see that Governor Andrew Cuomo and the state legislature recognize the pressing issue of college affordability. Over the next several years, this experiment in New York’s “laboratory of democracy” will provide important lessons for policymakers across the country.