THE BLOG
01/25/2017 12:20 pm ET

The Unintended Consequences of Free Tuition Proposals

Standing beside senator and former presidential candidate Bernie Sanders, New York Governor Andrew Cuomo made national news when he announced this month the most recent in a growing number of free college tuition proposals. Coming on the heels of similar proposals by Sanders, presidential nominee Hillary Clinton, and Rhode Island Governor Gina Raimondo, Cuomo's "Excelsior Scholarship Program" would provide free tuition for low- and middle-income families to attend public colleges and universities in New York if their families earn $125,000 or less per year.

This New York 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.

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 flood of 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 sudden 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.

Collectively, the independent not-for-profit colleges in New York have an estimated economic impact of 79.6 billion dollars annually. Even small private colleges contribute substantially to the economy. For example, Daemen College with a student population of just under 3,000 has over 600 employees and contributes 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 because hundreds if not thousands of faculty and staff would suddenly be out of work, and tax revenue would necessarily 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 state-wide college financial aid system, thereby allowing families to decide which colleges to attend--state universities, community colleges, or independent institutions. This is precisely how it has been done in New York. The state's Tuition Assistance Program has worked well and would work even better with additional funding.

So, as the New York proposal illustrates, public officials on both the national and state levels need to consult with higher education leaders as they craft proposals that potentially could affect hundreds of thousands of students. Not doing so increases the chances that a plan could have serious negative consequences both for institutions and--most importantly--for our students.

Note: An earlier version of this column appeared in the Buffalo News.

CONVERSATIONS