What’s New
One of the nation’s most far-reaching free-tuition efforts just got a big boost: State leaders in New Mexico have set aside nearly $1 billion to help sustain the program, which costs $146 million annually.
Any state resident accepted to a public college can get free tuition in New Mexico. The new money will create the largest “trust fund” for higher education in the United States, according to a statement from Gov. Michelle Lujan Grisham, a Democrat, who signed the legislation last week.
It’s the latest development in a wave of state investments in free tuition, which has scaled up since President Biden’s plan for free community college stalled in Congress two years ago. Biden again called for free community college in his latest budget proposal, though it is unlikely to pass the Republican-controlled U.S. House.
At least 32 states offer some kind of statewide free tuition, according to the Campaign for Free College Tuition, an advocacy organization.
The Details
New Mexico’s free-tuition program became permanent in 2022, combining the state’s existing lottery-funded scholarship for recent high-school graduates with a new Opportunity Scholarship that would be available to everyone. With no eligibility restrictions based on income, New Mexico’s program stands out.
Oil and gas revenue is currently generating a surplus and will help pay for the $959-million trust fund.
Douglas N. Harris, a professor of economics at Tulane University, said in an interview that the new fund will provide one-third of the money needed annually to sustain New Mexico’s two scholarships. The rest will come from appropriations from the state’s general fund and lottery revenue.
Elsewhere, Minnesota is debuting its version of free tuition this fall: The scholarship will make public colleges tuition free for students whose families make less than $80,000 a year.
Washington State’s free-tuition program, created in 2019, covers tuition for low-income families; eligibility is determined on a sliding scale. As of 2022, Washington State contributed the most grant aid per student in the country, according to a survey from the National Association of State Student Grant and Aid Programs.
In 2017, New York became the first state to make tuition free for low-income residents with no academic-performance requirements. The Excelsior Scholarship covers the cost of tuition for families who make less than $125,000 a year, but recipients must reside in the state for at least 12 months prior to the start of the term. New York officials projected that one million students would benefit; as of 2022, only about 73,000 students had received the award, many of them from families with incomes at or above $70,000, according to CNBC.
The vast majority of free-tuition efforts at the state level only cover the cost of community colleges. Tennessee enacted the first such program in 2014; today, all 50 states have at least one, but many don’t extend statewide.
The Backdrop
The allure of free college is one way that states are responding to enrollment declines and concerns about mounting student debt. In New Mexico, enrollment at public colleges has increased 10 percent since its free-tuition expansion was introduced. Tennessee saw a 6-percent bump in its overall college-going rate the year after free tuition began.
Most such programs screen eligibility based on high-school grades and require students to maintain a certain GPA while receiving aid.
Those requirements can be a barrier: A 2018 study from the Brookings Institution, authored by Harris and several colleagues, found that, despite being extremely popular, merit and performance requirements in free-tuition programs took funding away from the students who needed it most.
That puts lawmakers in a catch-22, Harris told The Chronicle: Restricting access to free tuition makes these programs more likely to survive — politically and financially — in the long term, but also less likely to be effective.
Most state scholarships are “last dollar,” which kick in after other federal and state aid has been applied, and typically only cover tuition, not additional costs like books or lodging. Washington State’s program is one of the few exceptions; its “first dollar” structure allows Pell Grants and other aid to go toward non-tuition expenses and living costs.
Some states have even been a victim of their own success. A free community-college initiative in Massachusetts pushed enrollment up so far it has strained the system. Stephanie J. Montoya, a spokesperson for the New Mexico Higher Education Department, told The Chronicle she also expects increased enrollment to drive up the cost of New Mexico’s scholarships in the near future.
What’s Next
Over 60 percent of Americans support tuition-free public college, according to a 2021 Pew survey. Though that figure included just 36 percent of Republicans, free community college remains a popular bipartisan idea.
State investment in higher education increased by around 10 percent this fiscal year, but an influx of federal dollars from the pandemic era is coming to a end. In New Mexico, Covid-relief funding made up 11.7 percent of the state’s 2024 higher-education budget, according to the annual Grapevine report. New Mexico’s finances also rely on oil revenue, which isn’t consistent.
But prospects for New Mexico’s free-tuition program are good. Using a trust fund for higher ed essentially puts money away in reserves and allows it to generate interest, Harris said. That mitigates the loss of other sources — such as potential declines in oil revenue.
The nearly $1-billion pot might not seem like a lot to people from high-population states like California, but it’s a “huge” amount of money for a state like New Mexico, Harris said. It demonstrates a strong political will to stay the course on free college tuition, he said.
As for everywhere else, the future is more uncertain. “Politicians are not always the longest-term thinkers,” said Harris. Education is often one of the biggest line items in state budgets, he said, so it’s always one of the first candidates for cuts.
