The unintended consequences of free college tuition

What looks good on paper may not translate to reality in higher ed
By: | Issue: March, 2017
February 21, 2017

New York Gov. Andrew Cuomo made national news when, standing beside senator and former presidential candidate Bernie Sanders, he announced in January the most recent in a growing number of free tuition proposals.

Coming on the heels of similar proposals by Sanders, presidential nominee Hillary Clinton and Rhode Island Gov. Gina Raimondo, Cuomo’s “Excelsior Scholarship Program” would provide low- and middle-income families earning $125,000 or less per year with free tuition to public colleges and universities in New York.

This proposal can serve as a case study (or cautionary tale) about how such free tuition plans nationwide can produce unintended consequences if they are not informed by input from higher education leaders.

Economic turmoil?

Like all of the free tuition plans proposed to date, the Cuomo plan in its present form will have unintended consequences that could be devastating to the state’s economy. In New York, more degrees are conferred each year by private institutions than by public colleges.

Suddenly injecting massive funding into public-sector colleges could result in an immense shift in students from private to public colleges, thereby immediately overwhelming state institutions.

Faced with a deluge of new students, state colleges would have no choice but to appeal to state government for millions of dollars in additional permanent funding to handle the influx. New faculty and staff would need to be hired and buildings built in order to accommodate these new students.

The state’s community colleges would also be endangered. Many students attend community colleges because of the low tuition. If state institutions were tuition-free, there would be no incentive to attend the local community college, rather than the nearby research university.

Consequently, the community colleges would also experience a precipitous drop in enrollment.

What’s more, if students abandon private colleges and inundate the state’s public institutions, independent colleges that are already experiencing financial difficulty could potentially collapse, as Dowling College on Long Island did last year and other small colleges do across the nation every year.

Focus on financial aid

Collectively, the independent, not-for-profit colleges in New York have an estimated annual economic impact of $79.6 billion. Even small private colleges contribute substantially to the economy. For example, at Daemen College, we have a student population of just under 3,000 and over 600 employees.

We contribute nearly $130 million to the economy annually. If multiple colleges collapse as a result of the governor’s proposal, the economy would suffer a huge blow as hundreds, if not thousands, of faculty and staff would suddenly be out of work, and tax revenue would shrink.

If the New York governor had consulted with higher education leaders in both the public and private sectors, he would have discovered that he can achieve his objectives and avoid these unintended consequences by simply investing the funds into the statewide college financial aid system, thereby allowing families to decide whether to attend state universities, community colleges or independent institutions.

This is precisely how it has been done previously. The state’s Tuition Assistance Program has worked well and would work even better with additional funding

So, as the New York proposal illustrates, officials need to consult with higher education leaders to craft proposals that will affect hundreds of thousands of students. Not doing so increases the chances that a plan could have serious negative consequences.

Note: At press time, San Francisco joined the free college movement. Next fall, the City College of San Francisco will be tuition-free for all city residents. The plan applies only to community colleges and will cover tuition for both full-time and part-time students.

Gary A. Olson is president of Daemen College in New York.