Testimony: FY2021 NYS Budget – Higher Education

by E.J. McMahon |  | Testimony

Testimony of E.J. McMahon
Research Director, Empire Center for Public Policy
Submitted to the Joint Legislative Fiscal Committees
Feb. 4, 2020

In April 2017, the Legislature approved Governor Cuomo’s proposal to establish the Excelsior Scholarship program, which promised to eliminate SUNY and CUNY tuition for undergraduates from state resident households with gross annual incomes up to $125,000. In legislation submitted with the FY 2021 Executive Budget, Governor Cuomo proposes raising that gross annual income threshold to $135,000 in 2020-21, and to $150,000 in 2021-22, at a total additional cost of $35 million.

The proposed increase in the Excelsior Scholarship income cap would build on a program that was fundamentally flawed, wasteful and unfair to begin with.

The Legislature should reject this proposal, and instead begin phasing out the Excelsior Scholarship program, accepting no new applicants after this year. The entire proposed $146 million budget allocation for Excelsior ultimately should be redirected to fund expansion of the means-tested Tuition Assistance Program (TAP).

As of 2019-20, Excelsior Scholarships have been awarded to 30,000 students, or less than 5 percent of total SUNY and CUNY undergraduate enrollment. But the principal fault of the Excelsior Scholarships program is not its failure to deliver on a promise of “free” college. Even if the state could afford the multi-billion dollar cost of such an entitlement, the elimination of public college tuition would be a highly debatable policy priority on grounds of equity and efficiency.

Exaggerated promises and flawed premises aside, the Excelsior Scholarship program is objectionable on three grounds.

1. It is regressive.

Excelsior is a “last-dollar” addition to other state-funded and institutional aid programs, which already eliminate or significantly reduce tuition for hundreds of thousands of lower-income students in New York. But in contrast to those programs, the net value of the Excelsior Scholarship increases with the gross income of the recipient’s tax-filing household—regardless of family size, living expenses, or marital status—before abruptly dropping to zero once income tops $125,000.

Many students currently qualifying for the maximum Excelsior award of $6,470 could no doubt afford to pay New York’s relatively low public college tuition rates without any added subsidy. Raising the income cap to $150,000—into the top income quintile of New York households—would simply offer a generous tuition break to even more students who clearly don’t need the help.

2. It is cumbersome to administer.

Eligibility for Excelsior requires a minimum of 12 credits per semester and a full course load of 30 credits a year, which cannot be fully confirmed by campus financial aid offices until the year has ended. Excelsior winners also are required to sign a contract stipulating that, after graduation, they will live and work in New York State for as many years as they received the scholarship. Those who fail to meet the residency and workplace requirement will have their grants converted into interest-free 10-year loans—a claw-back provision that will be difficult to enforce.

3. It shuts out the private sector.

New York is home to the nation’s largest combination of public and private colleges. Among New York residents aiming for four-year degrees, more than 40 percent initially enroll in private institutions located in the state, which award more baccalaureate degrees than SUNY and CUNY combined. But in a striking departure from Albany’s longtime bipartisan commitment to promoting diverse educational options, the Excelsior program excludes students at private colleges. In its place, the state offers students at private colleges a more limited “Enhanced Tuition” program with so many strings attached that few colleges are choosing to offer it.

Excelsior was promoted as the solution to what the governor portrayed as a college affordability crisis, including the frequently cited $30,000 average debt levels. In reality, even before Excelsior, barely half of all SUNY undergrads—and barely one out of every four CUNY students—graduated with any college loans outstanding.

To reduce the cost of college attendance for New Yorkers who can least afford it, the money budgeted for Excelsior could be more effectively spent on expanding the state’s existing TAP scholarships. With more than 300,000 recipients and a budget approaching $900 million, TAP is the most extensive means-tested scholarship program funded by any state—a college affordability boost truly worth boasting about.

Unlike Excelsior, TAP is based on demonstrated financial need, reserving its largest benefits to students from lower-income households. It annually subsidizes a fully tuition-free SUNY and CUNY education for many more students than now receive Excelsior scholarships.

Combined with federal Pell grants and institutional aid, TAP also significantly reduces tuition costs for low-income students attending private colleges in the state. It thus helps New York students afford the college that best suits their academic interests and career goals.

A more detailed analysis and critique of the Excelsior Scholarship program can be found in this Empire Center research paper.