New York Tuition

This is going to take several posts.  Governor Cuomo announced (h/t Instapundit):

New York will be the only state in the country to cover four-year public college tuition for residents after the program was included in the budget package approved Sunday night.

The state’s Excelsior Scholarship program will be rolled out in tiers over the next three years, starting with full coverage of four-year college tuition this fall for students whose families make less than $100,000.

The income cap will increase to $110,000 in 2018 and $125,000 in 2019.

It will cover 80 percent of NY residents.  We are trying to find out more information as the details always matter.  For now let’s consider demand and pricing.

Yes, demand curves slope downward to the right so at a price of zero demand will be higher than it currently is.  The current price is $6,470 so this will have a big impact on demand and the NY budget.  If all of the out-of-state and international enrollment is undergraduate then NY undergraduate headcount enrollment is about 360,000.  Taking 80% and making a big adjustment for part-timers, let’s say there are 200,000 undergraduate full-time students in the system. This would cost 50,000 * $6,470 in the first year or $323 million.  That would explain the entire 6.3 percent increase and then some.  Of course, people don’t complete in four years so our estimate might be high but it seems reasonable to us.

So there will be much greater demand for SUNY from NY residents.  That means more rejections by admissions.  High demand schools will be able to raise admission standards.  Those schools will be happy but the rejected folks will not.  There will also be the within school demand to consider.  Will these financially motivated folks be interested in financially rewarding majors?  That seems likely.  That means that places like the business schools are likely to see increasing demand.  Unless they get resources they will find ways to turn away students.  We know at least one business school that uses a sliding admission standard to admit the number of students they want as juniors.

Pricing is another way that business schools and other in demand programs use to control demand and provide resources because most in demand programs are high cost.  They are, in part, high cost because the faculty are in demand and, consequently, high priced.  Business schools have surcharges to pay the cost of the programs and discourage less motivated students.  We wonder how the NY scholarships will deal with such surcharges.  It is like insurance.  If the students don’t pay they they won’t care.  If the state pays then there will be a great incentive for programs to add surcharges.

In short, making college free is going to put incredible stress on the SUNY System.  There will be more rejections in admissions.  There will be stress on programs to get resources or control numbers.  Given that the state budget increase seems insufficient to pay for the “scholarships,” it is going to be a hard year at SUNY schools.  We are glad we are retired.  We can tell recruiters for any SUNY program in advance that we are not interested at any price.

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