A better way to help students pay for college
Tuition-free college is having a moment. States across the country are offering tuition-free programs at their community colleges. And last year New York State began the largest tuition-free program in the country, making all two- and four-year colleges tuition-free for families earning under $125,000.
While this all sounds great, it’s actually not the best policy for non-affluent students.
Here’s why. The vast majority of these tuition-free programs are “last-dollar” scholarships, meaning they cover any tuition costs that aren’t already covered by federal Pell grants and state grants. As Matthew Chingos of the Urban Institute wrote of the New York plan, this means that lower-income students, who might get most of their tuition costs already covered through federal and state grants, will get relatively little from these tuition-free efforts.
This is a problem because tuition is far from the only cost of attending college. The average undergraduate at a residential public university spends over $14,000 per year on housing, food, transportation, books, and other expenses.
So, what is good policy to promote college affordability? Senator Brian Schatz (D – HI) has the answer, with the Debt-Free College Act of 2018 that he introduced earlier this year.
In Schatz’s plan, state governments would award students need-based aid up to the full cost of attendance at any public institution in the state, two- or four-year, after taking into account Pell grants and institutional aid. In exchange, the federal government would match the full amount each state appropriates to public institutions.
Schatz’s plan is different from “tuition-free” plans in three important ways. First, and most importantly, the plan doesn’t only focus on tuition, but the entire cost of attendance. This should be a component of any plan – for four-year or community college – that seeks to make college more affordable for non-affluent students. Ensuring tuition is covered does a student no good if she can’t afford everything else.
Second, it avoids the trap of creating a higher-education caste system, where four-year colleges are reserved for affluent students, and everyone else starts at a community college. While free-tuition programs at community colleges are surely beneficial for some students, they can also end up incentivizing a higher-achieving, low-income student to start at a community college before moving on to a four-year school. This is as major problem because the vast majority of students who start at a two-year institution fail to earn a four-year degree, even though over 80 percent of entering community college students say it’s their ultimate goal to do so. Schatz’s plan would offer students full financial support regardless of the educational pathway they choose.
And finally, unlike many free-tuition plans, this plan takes into account a family’s ability to pay, just as the current financial aid system does. In this way, funding is allocated to students that need it, and is not going to subsidize the tuition of students from families who can more than afford the cost.
Aside from the federal matching support, Schatz’s plan is quite similar to what we propose in our education state policy agenda. In addition to increased appropriations for public universities, which have been cut by $1 billion in inflation adjusted dollars since 2001, we advocate for dramatically increasing the need-based aid that the state awards to non-affluent students. Michigan offers only about $260 in state aid per undergraduate student, when many non-affluent students face thousands of dollars worth of gaps even after maximizing their federal student loans. New Jersey, Washington state, California, New York, and Indiana all offer over $1,000 in need-based aid per undergraduate student.
Instead of tuition-free plans, we should provide substantial state-aid to any student who needs it, such that federal, institutional, and state grants, plus a moderate amount of student loans, covers the full cost of attendance at a public institution of the student’s choice. While we’d welcome Schatz’s plan, and more federal support for higher education, there’s no reason we can’t make college far more affordable for non-affluent students right now.