Free tuition and college enrollment: evidence from New York’s Excelsior program

ABSTRACT

Since the fall of 2017, New York has offered free tuition to eligible residents attending its state-funded two-year and four-year colleges under its unique Excelsior Scholarship program. We use the difference-in-differences and generalized synthetic control estimators to document that institution-level enrollment effects are negligible. Our study provides the first evidence of enrollment responses to a state-wide promise program within the four-year sector and adds new results to the fast-growing free-college literature. We propose competing channels to rationalize the obtained findings and compare Excelsior with other prominent initiatives to shed light on both design and implementation.

KEYWORDS:

• Free college
• financial aid
• college promise
• higher education funding
• Tennessee Promise
• tuition assistance
• New York Excelsior

JEL CLASSIFICATIONS:

• I22
• I23
• J01

Acknowledgements

I owe my sincere gratitude to Christian Vossler and Celeste Carruthers for their detailed feedback and enthusiastic guidance at various stages of the research. I also thank Yiqing Xu (UCSD), Giang Vu (U Louisville), and Licheng Liu (Tsinghua U) for their valuable methodological assistance. For other insightful comments and suggestions, I especially thank Education Economics Co-Editor John Heywood, an anonymous reviewer, Prottoy Akbar, Tianyi Wang (U Pittsburgh), Bokseong Jeong, Vasudha Chopra, Yancheng Xiao, John McMahan, Ben Meadows, Scott Gilpatric (U Tennessee), Eric Chiang (Florida Atlantic U), Quang Evansluong (Lund U and U Gothenburg), Paolo Barbieri (U Gothenburg and U Bologna), and Bang Nguyen (NYU Stern). I appreciate additional feedback from all the students and faculty members of the Applied Micro Group and the Microeconomic Theory Working Group at the Department of Economics (U Tennessee), the audience at my brown bag seminar presentation at U Tennessee, and the fellow participants at the 13th Annual Economics Graduate Student Conference, particularly my session chair Ian Fillmore (WUSTL). I gratefully acknowledge writing support from graduate students and faculty members of the Department of English and Writing Center (U Tennessee). No financial support for this research project was received. I declare that the viewpoints presented here are mine alone. I declare no conflict of interest.

Disclosure statement

No potential conflict of interest was reported by the author.

Submission declaration

I declare that the present work is original and has not been published previously, that it is not under consideration for publication anywhere else, and that if accepted, it will not be published elsewhere in the same form in any language without the publisher's written consent.

Notes

1 The College Board (2017) reports that the average full-time in-state public four-year college student incurs an attendance cost (net of grant aid and federal tax credits and deductions) of $4,140 dollars, which is about 30 percent higher than that a decade earlier. While students at public four-year universities whose incomes below $30,000 can have their tuition fully covered by federal resources and receive additional grant aid, they are expected to incur an estimated $14,520 in nontuition expenses. Detailed trend descriptions and analyses are provided in the 2017 College Board Research Brief retrievable from https://trends.collegeboard.org/sites/default/files/2017-trends-in-college-pricing_0.pdf

2 As a reference, the average in-state required fees for full-time undergraduates within the public four-year sector in New York for each academic year, rounded to the nearest whole number, are: $921 (2010-2011), $951 (2011-2012), $1,045 (2012-2013), $1,045 (2013-2014), $1,098 (2014-2015), $1,177 (2015-2016), $1,227 (2016-2017), and $1,255 (2017-2018). The average fees for the public two-year sector are: $441 (2010-2011), $465 (2011-2012), $487 (2012-2013), $505 (2013-2014), $527 (2014-2015), $569 (2015-2016), $618 (2016-2017), and $639 (2017-2018). These figures are computed by the author based on IPEDS data available up to the 2017–2018 academic year.

3 Inside Higher Ed features a brief outline of the Democratic presidential candidates’ proposals for free college at: https://www.insidehighered.com/news/2019/06/28/democratic-contenders-draw-contrasts-free-college-student-debt.

4 Within the private four-year group, we only focus on not-for-profit institutions.

5 See Perna and Leigh (2017) for a detailed discussion.

6 We emphasize the use of the level of enrollment, as opposed to the natural logarithm, as a preferred dependent variable for both theoretical and practical reasons. First, using logs instead of levels compresses the data and gives relatively more weight to smaller institutions, which may constitute a potentially misleading representation of the data and is therefore undesirable. Moreover, as discussed above, DID results hinge critically upon the common-trends assumption, which can be visually assessed with pre-trends graphs. As can be seen in the appendix (Figure A1), the historical averages of log-enrollment for the four-year sectors in New York and non-New York states already follow different paths even prior to the intervention, suggesting that a log-specification for the four-year sectors would be problematic for these sectors.

7 We thank Tianyi Wang and an anonymous reviewer for pointing this out.

8 https://www.ny.gov/sites/ny.gov/files/atoms/files/ExcelsiorScholarship_Toolkit.pdf