Gov. Phil Murphy’s state budget for fiscal year 2021 proposes extending to state universities the “free college tuition” concept, initiated recently for community colleges. It is a well-meaning supplemental college cost subsidy, but a questionable budget policy tool that may not work for both substantive educational and financial reasons.
College affordability, rising college cost and student debt remain a top public policy concern, nationally. Nearly 20 states have adopted some form of “free tuition” for college, meaning, typically, that certain students receive enough financial aid to cover tuition and fees for two years of community college. The goal is to expand college access and enhance college affordability, especially for low-income students.
In 2018, New Jersey created the Community College Opportunity Grant Program, to make college tuition free for students with family incomes under $65,000. A key requirement is that students must apply for all other qualified state and federal financial aid grants before this award kicks in. In this respect, the program is a “last state dollar” grant, meaning that it benefits students only after all other cost-of-attendance grants, such as Pell and TAG are exhausted. The Garden State Guarantee proposal in the budget would extend this type of tuition subsidy for the first two years of university study. Additionally, the proposal appears to create a tuition freeze for these (and perhaps other) university students, in exchange for additional state basic funding.
The idea of charging a fixed tuition for four years is not a new concept, nationally, especially at some private universities and for specialized programs. Universities such as Houston, Southern California, and Princeton have tuition payment guarantees for low-income students.
Some of the problems
The state should go slow on expanding this approach to senior universities, for several reasons:
- It is not a panacea for paying for college: While the grant undoubtedly helps some students, its “last dollar” component and income ceiling mean that students must still find monies for expenses beyond tuition and fees, such as travel and housing, that state and federal grants are not enough to cover. It is unlikely that the amount of money available would mitigate the need for additional revenue or loans for most students.
- The proposal may make long-term basic state funding to universities problematic: As proposed, $50 million would be allocated to senior universities, which would determine how to distribute the funds, and they would be required to freeze tuition for students for four years. In effect the program would be like the Tuition Stabilization Program that the state tried in the 1990s, as a budget approach (later discarded), tied to incentive funds to universities in exchange for limiting tuition increases. If tuition exceeded a certain percentage increase set in the state budget, the institutions forfeited the new funds.
The problem with this type of incentive funding for New Jersey public universities is unpredictability in state funding. When state money goes away, the program collapses. The flaw is that there is no guarantee for increased state funding to the universities to cover increasing cost of goods and services, and state negotiated labor contracts, or increased enrollment in future years. Making the program part of the budget act, rather than enacting it in permanent law, makes its sustainability even more problematic. Institutions simply may front-load the presumed cost; that is, set tuition higher in the first year to cover the next three.
This is dangerous because the most important reason for the rising cost of college is a reduction in the state share of funding for higher education, according to numerous studies, such as one from the Center on Budget and Policy Priorities:
- It raises equity concerns for students and families: An income cap on grant eligibility is as much a political choice as it is a policy choice, given that the program will not address middle-income family concerns about college affordability. A lower income cap would provide more money to low-income students, while a higher cap would advantage more middle-income students, but spread the funds thinner by providing fewer dollars to more students.
- It is unlikely that free college helps to keep more students in state, or to improve college quality and outcomes: There is limited evidence that free college programs influence the quality of college experience or college completion rates.
Many factors beyond affordability, such as academic advising and program sequencing — course and program choices affecting time to degree completion — determine college completion. While free college might help some students who already plan to attend college, it is unlikely that it will provide enough money to broaden college participation, by enticing more New Jersey students who otherwise would leave the state to stay here, much less increase college graduation rates.
Other policy issues
The governor and Legislature should be acknowledged for their strong commitment to college opportunity in New Jersey. The Garden State has an outstanding record of supporting college access and affordability, demonstrated by spending about $500 million annually in need-based college grants. Even with deep concerns about college cost, citizens broadly continue to value a college degree, and view it as an important means of building a better life. They need more clarity about how to pay for college, not just promises that may not be fulfilled.
A broader policy approach should be explored under the new state strategic plan for higher education, prior to expanding the free college concept to universities from community colleges. The state should reexamine the complexity of shared responsibilities for paying for college, expected college outcomes, and how existing student financial aid programs can be improved to achieve access and affordability objectives.
New Jersey needs a clearer budget rationale for supporting its colleges, one which fundamentally shapes college access, completion and outcomes goals. Instead of adding another financial aid and budget incentive program on top of a complex array of state and federal grant and loan programs, it needs to define more clearly the different roles of individual institutions, the cost of providing quality educational service, who pays how much for what, and expected learning outcomes that create a path for success through higher and practical learning.