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The Disappointing Inefficacy of Last-Dollar Tuition Programs

College affordability is widely recognized as a pervasive issue in dire need of a policy cure, as demonstrated by the fact that nearly every Democratic candidate for president has put forth plans focused on achieving free tuition in public colleges. Similarly, several states have announced plans to eliminate barriers to entry to higher education. New Mexico is the latest state to announce plans to entirely eliminate tuition at public colleges and universities. The state will use oil industry revenue to offset the costs of higher education, though the more detailed logistics of this policy have not yet been announced or approved by the New Mexico state legislature. Similarly, Cornell University and New York University have put forth initiatives to eliminate medical school tuition. However, the majority of plans involve “last-dollar” implementation, which only furthers issues of educational accessibility for low income students. 

Last-dollar programs cover traditional college costs like tuition but do not apply to the associated costs of college such as transportation, childcare, books, or other various fees. These programs go into effect after a student has already exhausted all  other avenues of public funding. This means that needy students have already received tuition funding but do not have assistance in relation to the associated costs, which can prove to be debilitating for low-income students. Overall, last-dollar tuition-free public college initiatives–though they may sound punchy or attractive to voters–are not implemented in the ways they are touted to be and end up intensifying inequality within higher education. Since the purpose of tuition-free public college initiatives is to address disparities in educational opportunities, these programs should aim to specifically benefit the most disenfranchised students, which last-dollar programs are incapable of doing.

Several issues with current tuition-free public college initiatives reveal the shortcomings of these programs. In a study for the Institute for Higher Education Policy (IHEP), researchers Alain Poutre and Mamie Voight found that existing programs, such as Tennessee’s Promise and New York’s Excelsior initiatives, do little to address issues of affordability for the neediest students. On the contrary, these programs benefit middle-income students–or, in the case of the Promise program, high-income students–the most. In their recommendations to improve the state of these programs, Poutre and Voight asserted that these initiatives need to operate with equity at their core if the purpose of the policies is truly serve to improve higher education accessibility. 

The flawed structure of the Tennessee Promise Program reveals the shortcomings of last-dollar plans overall. The Promise policy, a program for two-year colleges, may address the biggest initial barrier to college entry for disadvantaged students: tuition cost. However, the initiative does not cover ongoing expenses after tuition is paid, including books, transportation, and various other fees. Closer examinations of this program by journalists at the LA Times revealed that the economic structure of these last-dollar initiatives contributes to a higher likelihood that students in the program drop out of college in favor of full-time work. Similarly, New York’s Excelsior program is a last-dollar program for both two-year and four-year colleges that is activated when other forms of aid, such as Pell Grants or NY State Tuition Assistance Program (TAP) grants, are used up. As in Tennessee, low-income public college students in New York typically receive enough aid from Pell and TAP to cover tuition, so the majority of the funding secured through the Excelsior program goes to middle-income students. Throughout the 2017-2018 academic year, the family income threshold was capped at $100,000 and was raised to $110,000 for 2018-2019. In the 2020-2021 school year, the threshold will be raised to $125,000. Overall, these metrics demonstrate that the majority of funding in last-dollar programs is provided to families who can most likely pay tuition on their own. 

Forbes contributor Richard Vedder argues that raising private sector taxes to fund public college tuition programs would lower overall growth, as the output associated with lower taxes on the private sector is more valuable than the positive effects of public education. To back up this claim, he alleges that individual benefits from public college subsidies are minimal, as colleges deliver relatively little vocationally-relevant benefit. While Vedder’s hardline against tuition subsidies may be misguided or too heavy-handed, he does make a point critical to implementing good policy around college education: the actual measurable benefit to students, beyond a general sentiment of generosity, must be the central consideration in evaluating these initiatives. For instance, in 2017, it was found that only 33 percent  of undergraduates at four-year public universities graduate within four years, while only 22 percent of two-year college students earned a degree within three years. Given these rates, it seems like this type of investment may not be effective in keeping students in school beyond initial enrollment. 

Rigorous analysis of last-dollar programs suggests that dropouts end up being worse off than than those who don’t attend college at all, largely due to the possibility of accruing debt while enrolled, even if briefly, in college. Beyond the cost of tuition, it is the cost of living and staying at college that ends up becoming prohibitive for these students. Policy experts in both ideological camps have expressed major reservations with these last-dollar plans. Mary Clare Amselem, an analyst at the Heritage Foundation, argues against these tuition initiatives, as she asserts that they don’t address the underlying factors contributing towards the inflation of tuition. On the other side of the political spectrum, Tiffany Jones, director of higher education policy at the Education Trust, looked at the 13 free college programs active as of 2017 and found that eight of them implemented last-dollar practices; she similarly found this problematic for its lack of equity. Jones lamented , “That meant, obviously, that there was no financial benefit for the lowest-income students,” given that last-dollar programs often ignore greater costs of college for these students. That these vastly different thinkers have voiced their opposition to these programs for a varying array of justifications shows that the public should take another look at these programs prior to widespread implementation.

College inaccessibility is a crisis in need of addressing. However, the proposals for last-dollar programs, given their lack of equity, are not the right path for correction. Applying these programs  without considering family need will do little to address ongoing costs of college. Initiatives like these may even exacerbate inequality when it comes to educational access. According to a closer study of Elizabeth Warren’s proposed tuition program, for instance, 38 percent of the benefits of a nationally implemented free tuition program would go to students with household incomes of $120,000 or higher, while only eight percent of the benefits would go to students with household incomes of less than $35,000. If the purpose of these programs is to ensure that all students, regardless of income, can attend and complete college, these initiatives need a major revamping. Though initially appealing, especially to progressive voters and lawmakers, last-dollar programs do little to create vast or equitable change when it comes to higher education accessibility. 

Photo: Image via Clarice Oliveira (Flickr)