"Free Tuition"

"Free Tuition"
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When I think of “free tuition,” as politicians like Hillary Clinton, Andrew Cuomo, and Bernie Sanders have proposed, I am immediately reminded of the butterfly effect. Despite the obvious benefits for many, the unintended consequences of “free tuition” at state colleges and universities will be negative, so we need to be aware of those consequences.

The first impact of “free tuition” will be on the rich diversity of institutions that have long served our nation so well. With our variety of private and public colleges, we have long been able to suit the needs and desires of students.

Yes, college tuition is “free” in a number of European countries, but a significantly lower percentage of students go to college in those nations, and the tax rates in them are 20% to 60% higher than in the United States. Importantly, those countries have few, if any, private colleges and universities.

Making college more affordable for students is an admirable goal; college should be as affordable as possible. However, we need to deal with the concept of “free tuition” with eyes wide open and be aware of the unintended consequences the plan will spawn.

In New York, for instance, Governor Cuomo announced the cost of his “free tuition” plan as $163 million for the first year (the stated number covers tuition alone, so students will still pay for room and board). Not included, which is a classic example of unintended consequences, is the impact the plan will have on most private colleges in New York and on New York’s taxpayers.

What are those costs? The need to expand facilities to accommodate enlarged student bodies on state campuses as students choose state colleges and universities as a better financial option or, alternatively, to purchase the campuses of colleges forced to close as their students are “wooed” away by the Governor’s financial sugar plum; to add faculty to teach those students; and to increase staff size to serve student bodies that are projected to increase by nine to 22%.

New York’s private colleges serve, among their roughly 500,000 students, more low income students than New York’s state institutions. The Cuomo initiative will do nothing for those students. Rather the initiative will aid those far better able to afford paying tuition at state colleges, since the plan is available this year to families with income under $100,000 and, beginning in 2019, income under $125,000. While good political strategy, the plan is bad public policy. How can one label driving private colleges out of business as anything other than bad public policy?

An admission: I failed to keep costs down during my time as a college president. At the two institutions I was privileged to serve for 24 years, education costs grew annually, and they did so above the rate of inflation (although colleges use the Higher Education Price Index, whose components are very different from the Consumer Price Index).

I always sought to keep costs down as much as possible. It was a losing battle, since many of the college’s increasing costs, such as electronic subscriptions for the library or scientific equipment or insurance premiums, were beyond my control.

Not beyond my control, though, was how we addressed students’ share of the cost of their education. At Union College, for instance, we had a simple, need-based formula: Students first had to satisfy a work-study component ($1500); then, they were given loans, capped at $2625 for the first year, $3500 for the second year, and $5500 for each of the last two years.

Beyond work-study and loans, grants covered all remaining tuition, room, and board costs—federal grants under Pell and SEOG programs for qualifying students and Union College grants for the overwhelming majority of the cost. For a family without resources, Pell and SEOG grants provided $5000 in 2005 (my last year at Union); and for a family with the income specified in the Governor’s plan, where Pell and SEOG funding was unavailable, college grants made the cost of a Union education roughly equivalent to that at a state college.

Under either scenario, a student with loans would have owed $17,125 at the time of graduation. It was a debt, in my judgment, that neither overly burdened a student nor affected that student’s choice of career after graduation, which parenthetically, Governor Cuomo’s plan does affect, since students receiving “free tuition” must both graduate in four years (a difficult task given course requirements) and be employed in New York following graduation (if they leave the state, their tuition-free grant is converted into an interest-free loan).

Speaking of careers, we also put a cancellable loan program in place that could reduce the $17,125 significantly, perhaps entirely. If a graduate went into public service, which was broadly defined to include government service, teaching, or work in a variety of non-profit fields, the loan would be reduced by 20% for each year of service. After five years, therefore, the graduate would have no loan obligation.

I recognize Union’s approach was not/could not be followed by most private colleges in New York. In fact, and it is a fact the Governor and others fail to understand, the vast majority of private colleges in the state are running in the red. When last I looked, only 10% of the more than 100 private colleges and universities in New York were operating in the black.

Then there are the effects of “free tuition” on local communities. Many private colleges are located in small towns, where the college is the largest employer. What happens to those towns and, more importantly, the people living and working in them if “their” college closes?

Which brings us back to the Clinton/Cuomo/Sanders “free” tuition plan. Putting aside the obvious political appeal of the program, we need to recognize the plans will force private college closures that will cost the state’s taxpayers mightily, with costs far exceeding the Governor’s stated initial $163 million.

We should also be concerned about the non-financial costs of the Governor’s plan. Forcing private colleges out of business will reduce the diversity of institutions that have long served New York’s residents well, just as private colleges across the land have served their residents well.

So, while students and their parents will benefit form “free tuition” plans, taxpayers will not, and the states will be made less vibrant by an increasing lack of educational diversity. Before we decide to move to the European model of funding college, therefore, we need to understand the impact of the program on institutions, communities, and taxpayers because “free” tuition is anything but free.

(An earlier version of this piece appeared in the January 20, 2017 edition of the Schenectady Daily Gazette.)

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