Thursday, April 13, 2017

"Free"Tuition NY

The Cost of “Free” Tuition in New York

You’ve probably seen headlines proclaiming that the state of New York is going to provide free tuition to everyone. Isn’t that wonderful! As always, a little scrutiny goes a long way to debunking the mythology of the left, and this is no exception. A few minutes of math prove that the New York Governor is either lying about the new scholarship or criminally inept at simple arithmetic.

The Bill
The bill creates a scholarship program for New York residents. The scholarship can only be used at public colleges in the state, which limits it to City University of New York (CUNY) and State University of New York (SUNY) schools. The average tuition in both systems is just shy of $6,500 a year, and the scholarship maxes out at that same value.

The funds can be used in conjunction with other scholarships and revenue sources, but it can only be applied to tuition payments. Books, fees, housing, food and other normal expenses are not covered, so most students will still need to take loans and/or hold a regular job while they are
full-time students.

Speaking of full-time, students lose eligibility if they take fewer than 30 credits a year, and they have to commit to working in the state of New York for at least four years after graduation. Lastly, the bill determines that only students from households that make less than $100,000 a year qualify.

The Cost
The governor’s office has stated that they will allocate $163 million a year from a fund that already goes toward public universities to cover the cost of tuition. So far, it all sounds pretty nice. The families that struggle the most to pay for college can get substantial assistance, and no one who lives in New York ever leaves anyway, right?

Let’s get down to the gritty details. Currently, there are 468,000 students enrolled in SUNY and 516,000 at CUNY. To pay tuition for all of these students (at the average cost of $6500 a year) would cost the state of New York $6.396 billion each year.

That number is pretty different from the $163 million budget, so obviously some exclusions are necessary. If we knock out the families that make too much money and other disqualifications (such as undocumented residential status and out of state students), then we eliminate roughly 20 percent of that population.

Great! Now the cost is down to $5.117 billion a year. That’s still 31 times higher than the state can afford. In fact, the allocated funds are only enough to pay tuition for 2.5 percent of New York’s public college attendees. Free college for everyone? Hardly.

Extended Costs
Keep in mind, these numbers only pertain to the current state of college. As history has proven, making things free tends to artificially inflate their demand. At this juncture, there are two possibilities. The first is that the scholarship will be denied to 98 percent of applicants to keep everything within budget.

The second, and more likely, is that the budget will be supplemented to accommodate more students. While it’s extremely unlikely that New York will find enough money to support anywhere near half of qualifying individuals, they will pay enough tuition to substantially increase enrollment in their schools.

For anyone who has ever studied supply and demand, this means tuition will go up. Some estimates say that even as things stand, the new scholarship could easily cause an additional 3 percent per year in tuition increases.

Now we have to do even more math. Every dollar that tuition goes up will cost the state another million a year for the program. For better perspective, every percent increase in tuition will burden New York taxpayers by an additional $60 million a year, and this number assumes that enrollment increases only negligibly.

What we’re really looking at is a cascading tax burden that will add billions of dollars a year to the yolk of New York’s citizenry. All of this is for a state that is more than $350 million in debt with an annual deficit over $46 million. Adding billions to this is fiscally impossible.

Lessons to Learn
The left has big eyes, and they see this insurmountable budgetary crisis as a victory. They’ll say that if New York can pass this bill then the rest of the country can follow. They don’t care that the scholarship is bankrupt before it even goes into effect.

For the country to follow New York’s example, we would require $222 billion a year just to get started. With expected inflation, that number could eclipse $1 trillion in less than 5 years.

Once again, this is an example of how liberal policies just don’t work. New York is showing the country how to completely mismanage funds and ignore basic math in order to appeal to uneducated Americans. Ironically, this program might educate enough of those New Yorkers to eventually swing votes away from these inane liberal policy makers.

Regards, Ethan Warrick Editor Wealth Authority

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