As New York Embraces a Free-Tuition Plan, Private Colleges Fear the Consequences

For small, private colleges across New York State, budgeting for the upcoming year has never been easy.

But a new free-tuition plan that applies only to the state’s public colleges has private institutions fearing the worst. Students who are finalizing their college choices may snatch up the free-tuition offer without reading the fine print, private-college leaders say, and the enrollment numbers at such institutions could tumble.

That, they worry, could devastate colleges that are already operating on razor-thin margins and steer students into colleges that might not be the best fit for them.

Tuition revenue covers more than 95 percent of the operating budgets of many small private colleges, so the amount they can spend is largely determined by the number of students they enroll.

“It was relatively easy before to make that calculation,” said Gary A. Olson, president of Daemen College, which has around 2,800 students. “Now, I have no idea how to create our budget. If I’m missing 30 students, that could put us in a hole because of something I have no control over.”

The enrollment uncertainty is just one of the complaints small private colleges that recruit most of their students from New York have raised at a time when others are celebrating the nation’s largest free-tuition plan.

It’s a concept championed by former President Barack Obama and U.S. Sen. Bernie Sanders and supported by Hillary Clinton. Many educators thought the issue would fade during a Trump presidency, but some states and cities are moving ahead with their own plans.

None have been as extensive, or as potentially disruptive to private colleges, as New York’s.

Under a deal approved by lawmakers over the weekend, New York became the first state to make tuition free for eligible students at both two- and four-year public colleges. Students whose families earn up to $125,000 a year will be able to attend any State University of New York or City University of New York campus without paying tuition.

Because the program is a “last-dollar” scholarship that covers the cost left over after other financial support, like federal Pell Grants, is applied, it isn’t likely to have much effect on the lowest-income students. They already receive enough financial assistance to cover public-college tuition. But for middle-class families struggling to afford college, the cost difference could be significant.

The Excelsior Scholarship program, which was drafted by the state’s Democratic governor, Andrew M. Cuomo, will be phased in over three years, with students from families earning up to $100,000 eligible this coming fall. By 2019, that threshold will rise to $125,000.

To qualify, students will have to attend full-time and meet minimum grade-point averages.

They’ll still be on the hook for room, board, and other expenses, which can add up to $14,000 or more.

At first glance, the difference in cost between public and private colleges is huge.

In-state tuition is listed at $6,470 at SUNY’s four-year campuses and $4,370 at two-year colleges. That compares to an average of about $34,000 for private colleges.

New York’s private colleges are quick to point out that almost no one pays the sticker price; the average tuition for those who receive financial aid is $12,700, according to the Commission on Independent Colleges and Universities in New York, a nonprofit group that represents more than 100 private, nonprofit colleges and universities across the state. Its members enroll about 300,000 students and award 51 percent of the bachelor’s degrees conferred across the state.

Restrictions on the Money

Mr. Cuomo’s office has estimated that more than 940,000 students and families could qualify for the free-tuition plan. But there are strings attached.

After they graduate, recipients must live and work in New York for the same number of years as they receive the money. Otherwise, the scholarship converts to a loan.

Critics say that provision could unfairly limit job-market opportunities for college graduates. Supporters point out, though, that the requirement can be deferred if a person enrolls in graduate school outside the state or faces some kind of extreme hardship.

The effort isn’t just to throw money at the problem of “abysmal graduation rates,” a spokeswoman for the governor said, but to provide incentives for students to graduate on time and stay in the state.

The free-college plan encountered vigorous opposition from the state’s private-colleges commission. Instead of making public college tuition free, the commission wanted the state to invest more money into its Tuition Assistance Program, which provides money to students to attend either public or private colleges.

Responding to concerns that the plan was unfair to private colleges, the final version stipulated that students from families earning less than the income cap can receive up to $3,000 to attend private colleges. The colleges would have to match that amount and freeze those students’ tuition as long as they were enrolled.

Colleges can opt out. Some presidents said that given their financial constraints, providing the extra scholarships and freezing tuition for so many students would not only be difficult, but create administrative headaches by requiring them to track tuition differently.

“What’s very sad is that New York State, more than probably any state in the country, used to have a delicate balance between private and public colleges,” said Mr. Olson, Daemen’s president. “They collaborated together and the state provided support to both.” By giving students an incentive to attend public instead of private colleges, he said, the governor is “pitting the two sectors against each other.”

Daemen, he said, contributes about $130 million to the local economy each year. “If for some reason we were to fold because of this ill-conceived program, it would devastate the local economy.”

The private colleges commission estimates that the Excelsior Scholarship could cost the state 45,000 jobs and $224 million in tax revenue.

The commission’s president, Mary Beth Labate, released a statement on Tuesday expressing disappointment with the plan.

“Introducing a conditional and unguaranteed ‘free’ tuition plan, and a potentially unworkable and modest plan” for students attending private colleges, “will confuse and potentially mislead families at the moment when students are making the decision on what college to attend,” said Ms. Labate, who is also a former budget director for Mr. Cuomo and former fiscal-policy adviser to the chancellor of the SUNY system.

“As we have said from the beginning, while ‘free’ tuition makes for an effective sound bite, it does not make for sound public policy.”

She expanded on that point in an interview with The Chronicle.

“Even though the governor’s proposal has a lot of strings attached for both public and private colleges, our fear is that by the time families understand the fine print, they will have already been convinced by the rhetoric that a state school is where they need to be.”

Nine out of 10 private-college students receive financial aid, she said, but “we’re not in a position to compete with ‘free.’” She said it is too early to know how many students will change their minds and switch from private colleges to public ones. Some who are excited about the new scholarships have already been weighing in on social media.

“We’ll know better in a few weeks,” Ms. Labate said, “but by then, the damage will be done.”

Effect on Communities

Keuka College, set on a picturesque campus on one of the Finger Lakes in upstate New York, is among those facing uncertainty.

Ninety-four percent of its students come from New York State, and about 93 percent of the college’s operating budget comes from tuition, according to its president, Jorge L. Díaz-Herrera Less than 1 percent of its budget is covered by government sources.

Small private colleges like Keuka serve as economic engines for their communities, so policies that threaten their bottom lines hit their economies hard, said Mr. Díaz-Herrera. “We generate $108 to $110 million in business to Yates County,” which is among the poorest counties in the state, he said.

New York’s public colleges and universities are already crowded and won’t be able to accommodate the influx of students, he predicted. As a result, even some community colleges might be forced to become more selective, “and the very people the governor wants to help, many of whom are less prepared to go to college, will be locked out.”

Margaret L. Drugovich, president of Hartwick College said in a statement posted on the commission’s website last month that the program “will cost New York state taxpayers more, will overwhelm the SUNY/CUNY system, will weaken the private sector, and will deny the current freedom of choice that allows students to take state support to their New York college of choice.”

Timothy L. Hall, president of Mercy College, called the legislation a “step backward” for higher education in New York. “It puts private college students — many of whom are low income, first generation, or minority students — to the choice between chasing ‘free public college’ or remaining with less state financial support in an environment of smaller classes and more academic supports.”

A study by Georgetown University’s Center on Education and the Workforce estimated that under a similar free-college plan promoted by Mrs. Clinton, enrollment at private colleges would drop by 7 to 15 percent.

The most selective private colleges would probably still be able to attract students willing to pay more for the prestige, the study said. But outside that cluster, “many private institutions would likely be forced to become more elitist and less diverse as their dependence on students that could pay full tuition becomes even greater as price-sensitive students shift to public competitors.”

Many private colleges will also be forced to recruit more heavily from out of state, the study found.

A Popular Idea

Despite the uncertainties, the appeal of free college remains strong across the country, as evidenced an interactive map produced by the University of Pennsylvania’s Graduate School of Education.

Many of those “college promise” programs are just for community colleges, and they vary in the amount of money they provide.

Tennessee and Oregon offer tuition-free community college for all residents, regardless of income. Lawmakers in Rhode Island are considering a proposal by that state’s governor, Gina M. Raimondo, that would cover tuition and fees for two years of public college for all state residents, regardless of their incomes. It would either cover the first two years at a community college or the last two years for those pursuing a four-year degree.

Lawmakers in California have also been considering a couple of proposals for tuition-free college. San Francisco offers free tuition at City College of San Francisco for all city residents.

Not surprisingly, many private-college presidents are predicting the New York experiment will fail. Despite assurances that the plan has some flexibility to allow a student facing hardship to pause and restart, critics say that won’t account for routine interruptions like work and child care.

“Most students won’t live up to all of the requirements, and if they don’t, guess what: The scholarship automatically converts to a loan,” Mr. Olson said. “If you’re from an affluent family and don’t have to work or your family gets a tutor, you’ll get done in four years. If not, you could be even worse off than before.”

Katherine Mangan writes about community colleges, completion efforts, and job training, as well as other topics in daily news. Follow her on Twitter @KatherineMangan, or email her at katherine.mangan@chronicle.com.