Free-College Plans Don’t Always Mean No-Cost College

Free College doesn’t necessarily mean free college. Soaring costs of higher education, political hopefuls and graduates swamped with debt keep everyone aware of growing concerns about the challenges of paying for college.

The Century Foundation, one of the oldest policy research institutes in the country, released a report in early June that discusses state-wide free college and free tuition programs in the United States. Currently there are 22 state-wide free college programs in 19 states, programs similar to the “Promise scholarship” models. In the five years following the startup of the Tennessee Promise scholarship, states introduced 15 new programs. The quick introduction of so many new programs shows the urgency that is facing state governments, schools and students.

Most people who analyze economics, income and employment agree that higher education is one of the best ways for Americans to have access to a middle-class income and a financially stable life. For some people state-wide programs may help them afford higher education. One of the recent free college plans is the Excelsior Scholarship offered by the state of New York. In introducing this scholarship Gov. Cuomo said that “a college education is not a luxury – it is an absolute necessity for any chance at economic mobility.”

Along with the increase in the number of programs, there has been an increase in funding for the Promise scholarship programs. While states are giving less aid to higher education institutions they are increasing the funding for free college programs. Over the past three years funding has risen by an average of$107 million per year, according to the Century Foundation report. However, many of the free college programs fall short of free college and their plans don’t apply to all students.

Most free college plans fall into different categories: First-dollar programs and last–dollar programs. Last dollar programs require student to first use all their other grant, scholarship and Pell financial aid funds. Then the program will cover the remaining tuition costs. First-dollar programs cover tuition and fees without using Pell, grant or other aid first. That means those funds can be used for books, transportation or housing.

The 15 state-wide programs enacted in the last five years are all last-dollar and are limited to paying for tuition and fees. This means that students will need to fund the expenses not covered by their last-dollar program. According to the College Board, students attending local two-year schools paid about $1440 for books and supplies and $1800 for transportation. Students in four-year schools averaged $240 for books and supplies and $1,160 for transportation. Promise scholarships don’t cover these costs, or room and board.

Many of the programs have requirements that mean not all higher education students are eligible for the programs. More than half of state programs require students to attend full-time, and 11 of the state programs limit funds to recent high school graduates. These two restrictions mean that non-traditional students will not qualify for their state scholarship funds. Many state-wide plans are only available for tuition at two-year schools or community colleges. This will also mean that students who have stopped out and need to attend a four-year school to go back to school to complete their degree will not have funds available.

Student that do not qualify for free college programs face the challenge of finding alternate ways to finance their education. And the cost of higher education impacts many other stakeholders in addition to students. Businesses that need qualified workers and have to deal workers shortages experience the end result of high costs higher education. Without qualified workers businesses will not be able to expand and successfully compete in global markets. Without business productivity the standard of living for American workers cannot increase and they cannot be full participants in the marketplace. Business investment in tuition assistance programs is an effective way to turn this cycle.

All workers, including those returning to higher education as nontraditional students will need continual education to develop new skills they will need for technological advancements and changes in the workplace. John Seely Brown, Independent Co-chairman of the Deloitte Center for the Edge says, “The half-life of a learned skill is five years.” Businesses can guard against short-lived skills and help their workers access higher education, with tuition assistance. “Modern economies require that people invest in the acquisition of knowledge, skills and information not only when young but throughout most of their lives,” says Gary S. Becker, Nobel Laureate in Economic Sciences.

Many adult workers that do not qualify for free education programs could meet the high costs of continuing their education with an employer tuition assistance program. Georgetown Center of Employment and the Workforce believes that not only is tuition assistance the most important support for adult students, it benefits businesses also. “Over the past 20 years, businesses have begun to rethink their position on tuition assistance programs (TAPs) for employees. While TAPs may be beneficial for working learners, they also benefit employers. Workers who make full use of tuition assistance may demonstrate productivity above the market level.”

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