How does the New York free tuition program change things?

Mary Piccioli

April 24, 2017

This blog post was co-authored by Lisa Browning, executive consultant for Ruffalo Noel Levitz

How does the New York free tuition program implemented this month change the environment for college student recruiting, marketing, and enrollment management? For private institutions in New York, the potential effect of the free college tuition program is multi-layered. Will yield decline? Will students at privates transfer to publics at a higher rate than in the past? Should private institutions opt-in to new the ETA program? And what about out-of-state schools that recruit in New York—is there potential for a higher melt rate for students from New York for 2017-18, and might the New York portion of the admit pool decline in future years?

First, let’s look at the two new college scholarship programs in New York

When New York state legislators voted on their FY2018 budget in early April, two new financial aid programs for state residents were created.

For public two-year and four-year institutions, the Excelsior Scholarship claims to “make public college tuition-free” for students from families with an adjusted gross income up to $100,000 starting in the academic year 2017-18. The income ceiling increases to $110,000 for 2018-19 and to $125,000 for 2019-20. Below is the program description from the website of New York State Higher Education Services Corporation’s (NYSHESC):

An Excelsior Scholarship recipient can receive up to $5,500 from the Excelsior Scholarship, minus any amounts received for TAP (New York’s state grant program), Pell or other scholarships. The remainder of your tuition charge will be covered through a tuition credit paid through SUNY or CUNY.”

Note that mandatory fees are not covered, nor is any portion of room/board.

For private colleges and universities, the Enhanced Tuition Award (ETA) was also created:

An Enhanced Tuition Awards recipient can receive up to $6,000 through a combination of their TAP award [an existing state grant], ETA award, and a match from their private college. For example, a student who receives a $1,000 TAP award would receive an additional $5,000—half of which would be paid by the ETA and half by his or her college.”

For students who receive ETA funds, the institution must commit to freezing their tuition for their time at the school.

Implications of the New York free tuition program

When considering the implications of the Excelsior program on New York’s private institutions, there are some important and practical “devil in the details” topics to be addressed:

  • NYS budget allocations are likely to be inadequate. For the 2017-18 academic year, it seems clear that the $19M allocated for the ETA program is not nearly adequate to fund all of the potentially eligible full-time NY resident students at New York’s private colleges and universities. The average TAP award for students in the independent sector in 2015-16 was estimated at $3,100 for about 67,500 students (see source). Under the ETA formula, the state and the institution would each pay $1,450 to have a student’s award total $6,000. The state’s share would amount to almost $98M for TAP-eligible students. Based on a sampling of RNL client partner data, RNL estimates that an additional 10 percent, or 6,750 students, who are not TAP-eligible would be ETA-eligible because even though they don’t qualify for TAP, their family income is within the $100,000 income ceiling. The state share for that group would be roughly $20M. In total, the approximate match for the state would be $118M. The allocation of $19M is only 16 percent of the estimated total state share necessary if all private colleges opted in and all eligible students applied. Estimates for the potentially eligible pool at the state’s public institutions are harder to come by, in part because both Pell and TAP must be subtracted before calculating the Excelsior Scholarship. Other studies have suggested that the real cost, if all eligible students were covered, would be two to three times the state’s estimate of $163M (see Kelchen and Brookings).
  • A lottery system will be used if sufficient funds are not available. For both Excelsior and ETA, if the budgeted funds are not sufficient to cover all eligible applicants, a lottery system will be used to select recipients. NYSHESC will choose the recipients, and currently enrolled students receive priority.
  • Timing of the application for the awards. Applications are required for the Excelsior Scholarship and for the ETA award. According to the FAQ on NYSHESC’s website “It is anticipated that the Enhanced Tuition Award application and the Excelsior Scholarship application will be available in late May.” Late May. There is no indication as to when award notifications will be made. Given that the May 1st candidates’ reply date is fast approaching, clearly award notifications will not be made in time for students to be able to count on, with certainty, receipt of an award.

For private institutions in New York State that are attempting to gauge the impact of the two new programs on enrollment and finances:

  • A now-often-mentioned report from Georgetown University’s Center on Education and the Workforce estimates enrollment at privates could decline between 7 and 15 percent.
  • Given that strings are attached to the Excelsior Scholarship—needing to achieve 30 credit hours annually, and the requirement to live and work in New York for each year of award receipt—it is difficult to estimate if privates will suffer from attrition related to transfer to publics.
  • For privates considering whether to participate in the ETA program, there are at least four steps that should be taken to inform the campus discussion. Institutions should determine: 1) who might be eligible in the current study body; 2) the cost of the match required to participate, for both TAP eligible and non-TAP eligible students who meet the income threshold; 3) the lost revenue based on the tuition freeze for those who would receive the award; and 4) the long-term investment of participation.

Three additional recommendations/action steps

  • Know the context of what is happening with the New York free tuition program and continue to follow the discussion, whether you work at a NYS private institution or an out-of-state school that recruits in New York.
  • Be proactive in reaching out to New York students with value messaging and context about the New York free tuition programs. Tout your retention rates, graduation rates, and placement rates if they compare favorably to the NY publics. Remember, academic programs are at the top of the list of things students consider before enrolling. Fine-tune your value messaging around your academic programs and be specific. Internships and career preparation are distinctive opportunities for many private institutions.
  • Be proactive in messaging about the context of the New York free tuition program: awards are not guaranteed for either program, based on the suggested budget allocations; credit hour restrictions and live/work requirements upon completion limit opportunities after graduation; mandatory fees are not covered; room/board is not covered, and in some instances, room and board prices may be higher at the public institutions. Most importantly, announcements for the awards will come well after the May 1 decision deadline. Students and families should be counseled to keep their options open as they await the announcements for the new program.

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