Just two years ago, state officials were talking about making a greater investment in the state’s universities.
There was a proposal to create a $4 billion endowment for higher education through a long-term lease of the state lottery, but that plan was controversial and eventually died. Now, with the state in the midst of a budget crisis, plans for a major investment in New York’s universities are on hold, and education advocates worry that an opportunity has been lost.
“When [the endowment plan] collapsed, there was no plan B,” said Tom Hilliard, senior policy associate for the Schuyler Center for Analysis and Advocacy in Albany. “There was this widespread agreement that the state should be investing in higher education, and yet not one penny went to SUNY and CUNY, despite this consensus.”
Now, students at New York’s public colleges are being hit with a $600 tuition increase and funding for the State University of New York and City University of New York is being cut by $348 million.
In addition, Gov. David Paterson has proposed cutting $47 million from the state’s need-based grant program, the Tuition Assistance Program, and making the requirements for assistance stricter. Under the proposal, students would be required to take more course credits — 15 instead of nine — to receive full assistance.
About 80 percent of the revenue generated by the tuition hike will be used to plug the budget deficit, rather than support SUNY, said Fran Clark, program coordinator for the New York Public Interest Research Group.
“They’re asking students to pay more for less,” Clark said. “It’s a bad idea to increase tuition, but if you’re going to do it, at least spend it on SUNY.”
Funds going elsewhere
According to a recent report by the liberal Fiscal Policy Institute in Latham, New York has been underfunding SUNY and CUNY for more than a decade.
State aid to SUNY’s four-year colleges and graduate schools had fallen by five percent per student since the early 1990s, while CUNY funding was down by 14 percent, according to the report.
Hilliard said the cuts to higher education reveal a lot about the state’s priorities.
“To say the state is cutting SUNY because of the budget deficit is to take the easy way out,” Hilliard said. “The governor has chosen other priorities.”
For instance, the state is continuing to fund economic development programs, such as the Empire Zone program, that Hilliard believes are of questionable value. Though Paterson has proposed cutting funding for the Empire Zone program, he still plans to fund it, and he also wants to create a new economic development program that will provide grants and research and development tax credits.
“The fact that he’s creating a new grant program is a statement that he considers that program more important than SUNY,” he said. “That’s why you can’t really say that SUNY is taking cuts because of the budget crisis.”
Paterson has proposed the creation of the New York Higher Education Loan Program, which would provide students attending New York colleges with access to low-cost education loans unavailable to them in the private market. The new program would require a $50 million investment and provide loans with relatively low interest rates of 7.5 to 8.5 percent to students.
When the program was announced, James Ross, the president of the New York State Higher Education Services Corporation, said, “A student borrowing $10,000 a year for four years would save an estimated $51,200 over the life of the loans, when compared with a typical 16.5 percent private loan. If 40,000 students borrowed through NYHELP annually, the cumulated estimated savings would be $2 billion.”
Yet education advocates are unimpressed with the loan program and said that it is unclear whether the program is needed and that it would be better to maintain TAP funding as it is than saddle students with more loans.
“We haven’t taken a position that the program in and of itself is bad,” Hilliard said. “But to take money out of a need-based grant program and put it into a loan program is a misplaced priority. You’re taking money that makes college more affordable to students and increasing borrowing.”
Sandy Baum, a professor of economics at Skidmore College and senior policy analyst for the College Board, said that a new loan program is no replacement for TAP funds and that students should try to rely on federal loan sources.
“However, many students do borrow more, and it’s better for New York to provide terms that are more favorable than they could get on their own than to have them using credit cards and private bank loans,” she wrote in an e-mail. “Loan availability helps students, but they have to be careful not to borrow just because the money is there.”
Power of education
David Dyssegaard Kallick, a senior fellow with the Fiscal Policy Institute, said that the tuition increase may force students to take on more debt to pay for college and that students on the lower end of the socio-economic scale may forgo college altogether.
“An added tuition burden may be very hard for families to sustain,” he said.
This is unfortunate, he said, because college is one of the best vehicles for moving into the middle class.
“We want to see an expanded middle class,” he said. “If you make college an elite-only experience, it doesn’t bode well for building an expanded middle class.”
“Higher education is the linchpin of the state’s economic prosperity,” he said. “Our employers will need trained workers in order to compete. In a global, competitive economy, you have to have a skilled work force. That’s why SUNY, CUNY and private institutions are important.”
“A college education is the most valuable investment most people can make,” Baum said. “For some, this means a four-year degree; for others, it means a two-year degree or vocational training. In all cases, college significantly increases the earnings individuals are likely to have over their lifetimes. The state should support higher education and students generously. However, it is also true that students can borrow within reason and use their own resources to pay for college, since they will see most of the benefit in the form of higher earnings in the future.”
With tuition increases, tuition at State University of New York schools is $4,970 per year, while City University of New York schools cost $4,600 per year.
Baum noted that tuition in New York is lower, on average, than the rest of the United States and much lower than it is in neighboring states.
“Since there is also a generous need-based aid program in New York, public institutions are probably more affordable there than in many other states,” she said.