STRONG DE­MAND FOR NEW YORK

The Bond Buyer - - Front Page - By An­drew Coen

State’s new free public col­lege tu­ition pro­gram aimed at lower-in­come and mid­dle class fam­i­lies could threaten to dis­rupt the private higher ed­u­ca­tion land­scape, ac­cord­ing to analysts

Strong de­mand for New York State’s new free public col­lege tu­ition pro­gram aimed at lower-in­come and mid­dle class fam­i­lies could threaten to dis­rupt the private higher ed­u­ca­tion land­scape, ac­cord­ing to analysts.

An Au­gust re­port from Mu­nic­i­pal Mar­ket An­a­lyt­ics said that roughly 75,000 applications were re­ceived for the Em­pire State’s Ex­cel­sior Schol­ar­ship Pro­gram, more than three times the 23,000 an­tic­i­pated and bud­geted.

The Ex­cel­sior Schol­ar­ship pro­gram, ap­proved as part of New York’s fis­cal 2018 bud­get, pro­vides free tu­ition to in-state public col­leges for fam­i­lies with an­nual in­comes be­low $100,000 in the first year, ris­ing in phases up to a $125,000 cap for the 201920 school year. Par­tic­i­pants are re­quired to main­tain a cer­tain grade point av­er­age and re­main in New York State post-grad­u­a­tion for a pe­riod of time that matches the time they re­ceived fund­ing.

MMA man­ag­ing di­rec­tor Lisa Washburn noted that com­pet­ing with a “free” ed­u­ca­tion may be too much to over­come for some less se­lec­tive private col­leges, re­sult­ing in po­ten­tial clo­sures and merg­ers.

The Com­mis­sion on In­de­pen­dent Col­leges & Uni­ver­si­ties in New York es­ti­mates a net trans­fer of around 50,000 stu­dents from private col­leges to public in­sti­tu­tions within the state as a re­sult of Ex­cel­sior, ac­cord­ing to the MMA re­port. Some private col­leges al­ready ex­pe­ri­enc­ing en­roll­ment chal­lenges have loos­ened ad­mis­sion stan­dards and tar­geted more full-tu­ition in­ter­na­tional stu­dents, leav­ing lit­tle flex­i­bil­ity left to tackle headwinds from free public col­lege tu­ition ab­sent greater en­dow­ment spend­ing, ac­cord­ing to Washburn.

“Some col­leges just can’t of­fer more dis­count­ing or loosen stan­dards be­cause they have done that al­ready,” said Washburn. “There is not a lot of juice left.”

For­mer New York State Assem­bly­man Jerry Kre­mer said he hopes law­mak­ers will work on ex­pand­ing the free tu­ition in­cen­tive to private col­leges since many of­fer pro­grams and ser­vices not avail­able at state schools.

Kre­mer chairs New York’s Coun­cil of Gov­ern­ing Boards ,Boards, which rep­re­sents trustees of the more than 100 private col­leges in New York. He said the full im­pact from Ex­cel­sior will take some time to di­gest, but some smaller schools could face short-term risks from the en­roll­ment dips.

He noted that many stu­dents may at first be drawn to the pro­gram be­fore chang­ing course af­ter learn­ing about re­quire­ments such as stay­ing in New York for four years af­ter grad­u­a­tion.

“It’s a pro­gram that is ap­peal­ing, but it is its early stages and it’s hard to know how it’s go­ing to play out,” said Kre­mer, who has served on the board of trustees at Long Is­land’s Hof­s­tra Univer­sity for 26 years. “The devil will be in the de­tails.”

Washburn em­pha­sized that some New York private col­leges are bet­ter po­si­tioned than oth­ers to re­place would-be stu­dents lost to the Ex­cel­sior Pro­gram de­pend­ing on de­mand from applications and stu­dent-yield.

An MMA analysis said Hamil­ton Col­lege in Clin­ton, for ex­am­ple, had a re­place­ment pool of over 300% based on 4,086 ex­cess ap­pli­cants and a 35% yield, mean­ing it could fill its in­com­ing class three times from a left­over pool of those lost to Ex­cel­sior. On the neg­a­tive end, Iona Univer­sity in New Rochelle would only have cov­er­age to re­place 10% of its en­rolled class due to just 843 ex­cess ap­pli­cants and a 10% yield, ac­cord­ing to MMA.

“The highly com­pet­i­tive schools that have very strong brand recog­ni­tion will be best po­si­tioned,” said Washburn. ”Some uni­ver­si­ties have more flex­i­bil­ity.”

While fall en­roll­ment num­bers won’t be fi­nal­ized un­til Oc­to­ber, Fitch Rat­ings higher ed­u­ca­tion an­a­lyst Emily Wad­hwani said early in­di­ca­tions show no credit im­pact from Ex­cel­sior since the ma­jor­ity of private col­leges in the state have re­ported en­roll­ment gains for the new se­mes­ter.

Wad­hwani em­pha­sized that while Ex­cel­sior at­tracted big in­ter­est in year one, the amount of stu­dents el­i­gi­ble for the pro­gram as well as par­tic­i­pants who may have oth­er­wise at­tended private col­leges will be in­te­gral as­pects of de­ter­min­ing the ef­fect on some New York schools and private in­sti­tu­tions in nearby states that draw heav­ily from the Em­pire State.

“My guess is that what [Ex­cel­sior] re­ally did is deepen the pool of col­lege-bound se­niors rather than take away from stu­dents go­ing to private col­leges,” said Wad­hwani. “We haven’t seen a dip in en­roll­ment at private in­sti­tu­tions yet.”

S&P Global Rat­ings posted a Sept. 7 re­port about Ex­cel­sior not­ing that the pro­gram is un­likely to sig­nif­i­cantly ex­pand the num­ber of col­lege-go­ers in the state be­cause it doesn’t ad­dress non-tu­ition ex­penses that of­ten pre­vent the need­i­est stu­dents from at­tend­ing school full-time.

S&P an­a­lyst Jes­sica Mat­sumori said pro­jec­tions on any ma­te­rial credit im­pact to cer­tain col­leges are pre­ma­ture un­til it is de­ter­mined whether en­roll­ment shifts that oc­cur in the first year are a one-time ef­fect or prove to be a sus­tained long-term trend. She added that while Ex­cel­sior applications ex­ceeded ex­pec­ta­tions, pro­gram re­stric­tions may ul­ti­mately hold some stu­dents back from fol­low­ing through.

“There are so many stip­u­la­tions with the pro­gram that is un­clear how many will be el­i­gi­ble and how many will take part,” said Mat­sumori. “The jury is still out.”

Washburn said that if other states choose to adopt New York’s model the im­pact on private higher ed­u­ca­tion in­sti­tu­tions could be felt na­tion­ally and limit the pool of ap­pli­cants in­ter­ested in at­tend­ing non-public col­leges.

Iona Col­lege

Iona Col­lege in New Rochelle, N.Y., could face in­creased com­pe­ti­tion for stu­dents from a new state schol­arhip pro­gram for public col­leges and uni­ver­si­ties.

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