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Free college is now a reality in close to 20 states

CNBC logo CNBC 12/16/2018 Jessica Dickler

a person holding a sign: Emily Buckner at her Volunteer State Community College graduation© Provided by CNBC LLC Emily Buckner at her Volunteer State Community College graduation "There was no way I could have gone to a university after high school," said Emily Buckner, 20.

"My parents were laid off during the recession and it set us back a lot," she said. "When I finished high school, there was nothing."

Instead, Buckner took advantage of the Tennessee Promise — an offer of two years tuition-free at a community or technical college in the state.

In May, she completed her associate degree and is now enrolled as a junior at Tennessee Technological University, or Tennessee Tech, studying human resources.

In addition to the state funding, Buckner has relied solely on academic scholarships to pay for school as well as a job at Waffle House, which covers additional expenses such as books and food. She has no student loan debt.

"I know a lot of people go to college and a lot of people don't," she said, "I just felt like it was for me."

She credits the Tennessee Promise for opening the door.

Of the students who started in the program's first year in 2015, more than 50 percent have been successful, according to Mike Krause, the executive director of the Tennessee Higher Education Commission and founding director of Tennessee Promise.

More than 20 percent have graduated, another 20 percent are still enrolled and 10 percent successfully transferred to a four-year institution.

Now in its fourth year, the number of applicants is still rising, according to Krause.

"There are students that may have counted themselves out and when they hear that you can go for free that provides a sense of momentum," Krause said. (Students can use the scholarship at any of the state's 13 community colleges or other eligible associate degree programs or vocational schools.)

Other states, including Arkansas, Indiana, Minnesota, Montana, Oregon and Rhode Island, have also rolled out statewide free community-college programs and more are expected to follow.

a close up of a map© Provided by CNBC LLC

"Five years from now, we would expect that a majority of the states in the country would have free college tuition, and that would be a tipping point," said Morley Winograd, the president and CEO of the Campaign for Free College Tuition.

Last year, New York's Excelsior Scholarship became the first in the nation to cover four years of tuition without being tethered to academic performance.

The scholarship applies to all schools at the City University of New York and State University of New York (abbreviated CUNY and SUNY, respectively). New York says more than 940,000 middle-class families and individuals making up to $125,000 per year will qualify when the program completes its three-year phase-in in 2020.

"Today, college is what high school was — it should always be an option even if you can't afford it," Democratic Gov. Andrew Cuomo said in a press release.

To be eligible for the Excelsior scholarship, students need to:

• Be New York State residents.

• Attend a SUNY or CUNY two- or four-year program.

• Take 30 credits per calendar year (including January and summer sessions).

• Plan to live and work in New York following graduation for at least as long as the time they participate in the scholarship program.

Tuition has historically risen about 3 percent to 5 percent a year, according to the College Board, continuously outpacing inflation and family income.

During the recession, declining public funds caused tuition to skyrocket. At private four-year schools, average tuition and fees rose 26 percent in the last decade. Tuition plus fees at four-year public schools, which were harder hit, jumped 35 percent over the same time period.

The growing number of free tuition programs can be a lifeline.

"We haven't seen momentum around college affordability on the federal side, so it's welcome to see that happening on the state side," said Jennifer Mishory, a senior fellow at The Century Foundation, specializing in issues related to workforce and higher education.

In the state-based programs already in place, students receive a scholarship for the amount of tuition that is not covered by existing state or federal aid. Most, like Tennessee, are "last-dollar" scholarships, meaning the program pays for whatever tuition and fees are left after financial aid and other grants are applied.

Based on the early evidence, "we've seen access increasing," said Sara Goldrick Rab, a professor of higher education policy and sociology at Temple University. "It's absolutely a good start."

But critics say lower-income students, through a combination of existing grants and scholarships, already pay little in tuition to state schools, if anything at all.

"Many low-income students are effectively paying no tuition already, between the Pell Grant and state grants," said Mark Kantrowitz, Cappex.com's publisher and VP of strategy. "So, the incremental benefit to low-income students is small."

"It's not going to do anything to help the group that really does need help the most," added Ronald Ehrenberg, director of the Cornell Higher Education Research Institute, referring to "the students whose family incomes are less than $60,000 a year."

In fact, tying the scholarship to set requirements could increase costs for low-income students, in particular.

In New York, for example, students must live and work in state after graduation. Some programs also require recipients to maintain full-time status, which could be an obstacle for low-income students who must also work or balance family commitments while in school.

"If we were truly concerned about increasing accessibility, we would focus more money on the lower-income part of the population," said Ehrenberg.

In addition, the money does not cover books, room or board, costs that lower-income students struggle with, and diverting funds toward free tuition could come at the expense of other operations on campus, including hiring and retaining faculty and administrators.

"If you are not getting increases in appropriations, you aren't getting enough resources to handle any growth that occurs," said Ehrenberg.

"Promise programs are a step in the right direction but they are not perfect," Kantrowitz said. Overall, though, the pros outweigh the cons, he added.

"The idea of free tuition is causing students who are college capable to pursue a college education."

More for Personal Finance:

How families pay for college

When it comes to college financial aid, the sooner you file, the better

Try this trick to shave thousands off your student loan

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