On April 10, Governor of New York Andrew Cuomo announced the incoming arrival of a legislative bill entitled the Excelsior Scholarship. The bill is said to provide free tuition at any public two or four-year university in New York for state citizens making less than $100,000 per year (for 2017) and eventually for those making less than $125,000 when the program is completely phased in during 2019.
The first aspect that should be understood is Cuomo’s motive for the bill, which was introduced in January. Cuomo stated, “In this economy, you need a college education if you’re going to compete.” This suggests that the end goal of such a bill is providing New Yorkers the ability to be more competitive – within New York. Cuomo and New York Republicans agreed upon a measure that would force those who receive Excelsior Scholarship funds to stay in New York after graduation for at least the same number of years that they received Excelsior funding – or the amount received would be converted to a loan. Cuomo defended this decision by contending, “Why should New Yorkers pay for your college education and then you pick up and you move to California?”
It should also be understood what the Excelsior Scholarship covers. It is a need-based scholarship that covers the costs of tuition after federal and other state tuition aids. However, these are not the only costs associated with college, nor in New York’s case, the largest costs. For SUNY and CUNY schools, annual tuition is $6,470, while annual room and board is about $12,590 – not to include general fees or book expenses. Since the Excelsior Scholarship may only be used after other tuition-assistance scholarships or grants, there’s a possibility that the scholarship won’t reduce the costs of attending college by a meaningful amount.
Now, let’s talk very simple economics, and let’s operate on the assumption that Cuomo is entirely successful in his implementation of the Excelsior Scholarship – the best-case scenario. Beginning in 2017, New York citizens who are accepted to New York public colleges may use the Excelsior Scholarship to cover the remaining cost of tuition after other scholarships and grants. Let’s assume that this falls in line with Cuomo’s goal of having more people attend college so that they can be economically competitive. New York, then, will experience a large increase in the supply of college-educated citizens. This means that in industries for which colleges train students – investment banking, public policy, health services, and many other industries – there will be a greater amount of recent graduates looking for a job.
The job market is usually self-balancing. When someone cannot find a job in one area, they often go to another area in search of work. However, given the rule that graduates must stay in New York after they graduate for the same number of years that they received Excelsior assistance, this would not be possible. New York industry would not be able to sustain the sheer number of those in search of jobs, and unemployment among recent graduates would rise. As a result, Cuomo’s goal of granting more widespread education so that New Yorkers could be more competitive would not be realized.
Recent graduates would be unable to find work and unable to leave the state unless they were willing to incur student loans – which, ironically, goes against this bill’s primary sentiment: that student loans are detrimental to graduates. Thus, the value of a college degree in New York would fall. From the “best case scenario” standpoint, this bill would allow more people to pay the cost of tuition at public colleges, but it would also bloat the industries in New York so much that graduates would not be competitive anymore. In order to find a job, one would have to undercut the others because there is nothing to stop an employer from saying, “I’ll pay you $10,000 a year less than what you’re asking, or I’ll go to one of the other one-thousand newly-graduated students.” In actuality, it seems as though Cuomo has crafted legislation that will effectively cause the opposite of his stated goal.