Andrew Cuomo's Excelsior Scholarship: An Idiotic Policy

Stephen Kershnar

Andrew Cuomo’s Excelsior Scholarship: Stupidity on Parade

Dunkirk-Fredonia Observer

April 1, 2017

            Andrew Cuomo’s Excelsior Scholarship makes college tuition free for the middle class. This is an embarrassingly stupid idea. Full disclosure: I am a professor at a SUNY university.

            In the last election, presidential candidates Bernie Sanders and Hillary Clinton put forth plans to make college free. Cuomo jumped on the bandwagon, making state colleges and universities (government schools) tuition free for the middle class. Here is how Cuomo’s plan works. New York taxpayers will pay $163 million to make college tuition free at state colleges for those students who families make up to $100,000 in 2017. This will rise to $125,000 in two years. Tuition is roughly $6,500 a year. This does not cover room, board, and fees. These cost roughly $14,000 per year. The scholarship only applies to students who go to school full-time, graduate in four years, and stay in the state for four years after graduation. If a student doesn’t stay, the scholarship becomes a loan.

            Writing in The Washington Post, the Urban Institute’s Matthew Chingos points out that this plan does nothing for the poor. Chingos points out that Cuomo’s plan (unlike Sanders’ and Clinton’s plans) covers the difference between tuition and the student’s existing financial aid (read: college welfare). Poor students who would have gotten more than $11,000 in education-welfare (via Pell Grants and a state specific program), in effect get $0. They still have to come up with roughly $10,000 to cover room and board. In contrast, students from middle class families making $75,000-$110,000 will in effect get roughly $6,000. Cuomo thus decided to give the middle class $6,000 and the poor $0. He could have targeted the money toward the poor via the Tuition Assistance Program (TAP) or other programs, but decided that the middle class needed the welfare more.

            The taxpayers are getting hosed on this and it will get worse. Anyone who thinks that the poor will not eventually be taken care of has no idea how leftist, especially minority, politicians think and vote. The middle class will shortly begin screaming like stuck pigs that room and board need to be covered and that the four-year requirement must be scrapped and politicians will accommodate them. Predictably, then, the cost of this program will explode.

As the state increasingly fails to cover the cost of forgone tuition, state colleges will ratchet up housing and food costs as a form of backdoor tuition. Grade inflation will also get worse. Professors increasingly won’t endanger or flunk a student knowing that this could cost him his scholarship.

            The poor and especially minority students will not get this benefit or, if they do, will have to pay it back. The New York Times’ David Brooks points out that most poor, and especially minority, students do not graduate in four years. In fact, he notes, fewer than half of black and Hispanic college students at state colleges graduate in six years. They will thus not get the scholarship or be victimized by the scholarships becoming loans and backdoor tuition.

            The higher education system and the tax burden in New York will worsen. Private colleges will not be able to compete against free colleges and a significant number will shrink or close. This will reduce competition and thereby hurt the overall system of higher education. It will also redistribute students into government schools, thereby driving up taxes. This will occur despite the fact that New Yorkers already pay the highest taxes in the country (see Tax Foundation).

            It is unclear whether it will even benefit the middle class students who receive the scholarship. The scholarship requires that they live in New York for four years after graduating. On average, this will harm their ability to move to jobs that provide the most opportunity and pay the most. Over a career, it is likely to reduce to lifetime earnings more than $26,000 ($6,500 welfare per year x 4 years). Instead, this is a protectionist measure that like other protectionist measures redistributes money from one group to another and does so inefficiently.

Also, as Brooks points out (citing Northwestern University’s Chenny Ng), studies show that making education free results in students working less hard and being less likely to graduate. It is strange how paying for college makes students work more likely to graduate.

            The most disturbing aspect of the program, though, is not that it makes things worse for the poor, minorities, taxpayers, higher education, and, likely, middle class beneficiaries, it is its unfairness. Over a lifetime, Georgetown University’s Anthony Carnevale and colleagues found that a college degree adds roughly $1 million in lifetime earnings over a high school diploma. A professional degree adds $2.3 million. There is nothing fair, just, or caring about using government force to take taxpayers’ money and give it to middle class families whose children go to college, especially when these children will make lot more money than those who don’t go.

   

This is a disgusting redistribution of wealth, much of which will go to the upper middle class.  Consider, for example, Fredonia’s student body. It tends to come from the upper middle class with a median family income of $97,000 and with 4 out of 10 coming from the top 20% of family incomes (2013 numbers from The New York Times).

This disgusting redistribution to the upper middle class is made worse by the fact that the money is given away in a haphazard manner. If the state really cared about benefitting New Yorkers, it would give scholarships to those majoring in engineering, computer science, and finance and not to those majoring in elementary education, fine art, and drama because the former majors’ skills are so much more valuable.

It would also require graduates work full-time for the four-year period after graduation. In addition, it would exclude those with low SAT scores and low high school grade point averages.

Even if a college degree doesn’t add anything to an individual’s productivity, but merely signals higher intelligence or better work habits, there is still no reason to take more money from people who are shoulder the most crushing tax burden in the country and give it to adults with these competitive advantages.  Andrew