College Promise Programs Wrestle With Pandemic Realities

As states begin slashing budgets, some free college programs are feeling the sting.

October 8, 2020
 
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College promise programs have increased in popularity in recent years. Now, amid a pandemic and a recession, they might be on the chopping block.

Higher education groups are asking for at least $120 billion in future COVID-19 relief packages from Congress. Some states are making, or at least predicting, budget cuts in the billions, some of which will have to come from higher education systems.

Some experts predict that college promise programs, which commit to helping students cover the cost of college, will likely be OK. Student financial aid funding tends to not get hit as hard as state appropriations for higher education during recessions, and also tends to recover more quickly, said Robert Kelchen, associate professor of higher education at Seton Hall University.

While this funding tends to be more resilient during economic downturns, this is a different situation than the Great Recession, said Jennifer Mishory, senior fellow at the Century Foundation. Some programs have already received cuts.

"We don't really know how those challenges are going to play out," Mishory said.

Cuts and Limitations

Some states have already made cuts that have had immediate impacts.

The Oregon Legislature cut its promise program by $3.6 million. The program, which covers community college tuition costs for recent high school graduates after other grants are applied, had received a two-year appropriation of $40 million and had less than $20 million left for this budget year.

"Proportionately, the cut was very significant," said Juan Baez-Arevalo, director of the Office of Student Access and Completion for the Higher Education Coordinating Commission in the state.

The cut also came after awards were sent out. The state held a special legislative session on Aug. 10. The commission had predicted it would have about $19 million, so when the cuts came, it had to revoke awards from some students, Baez-Arevalo said.

About 1,000 students lost their awards. All of them had expected family contributions of more than $22,000, he said.

The timing is unfortunate, he said, but the Oregon Promise program is relatively narrow. It only serves students who are not adult learners who attend community colleges. The Oregon Opportunity Grant, the state's major financial aid program, was unscathed by the cuts, he said. Students with high financial needs would first get the grant funding, and then the promise program funds would cover the leftover costs.

Much is unknown about the future for the program, though. The state Legislature will convene this coming spring, Baez-Arevalo said. ​

"We don’t have any speculations at this point in time," he said. "One thing I can say is that college affordability and state investment in financial aid continues to be a very high priority for our commission and the legislators in the state."

The promise program has placed income limits on the awards in the past when state funding was tight, he said.

"If there are any permanent limits or changes in the future, it will probably be focused on prioritizing the highest-need students," he said.

The Excelsior Scholarship in New York could also be at risk. The state program aimed at helping lower- and middle-income students attend four-year programs at State University of New York and City University of New York institutions tuition-free is releasing the full financial awards for this fall, according to Angela Liotta, public information officer for New York State Higher Education Services Corporation. But the state is relying on federal aid to help with the future.

New York is facing a $62 billion loss over the next four years due to the coronavirus pandemic, Liotta said in an email. Without multiyear federal funding to help with this loss, the scholarship could be reduced or limited to current recipients, she said.

"We hope students and their families will join us in calling on the federal government to act as the level of funding the federal government sends to states will ultimately determine the size of the New York State budget and the level of funding available for financial aid programs," she wrote.

The consequences of cuts could be severe, said Eli Dvorkin, editorial and policy director at the Center for an Urban Future, which has studied and criticized the Excelsior Scholarship in the past. While the program isn't designed to focus on the state's neediest students, cuts to the program will still hurt.

"For many students, the benefit has helped with the indirect costs of college that restrict students from getting a degree and have, in some cases, risen in pandemic," Dvorkin said. "Losing that funding at a time when so many students are facing precarity will set back the state’s goals."

The state needs to preserve these types of programs, though, he said, because they can expand economic mobility in times of crisis. The fact that programs like Excelsior are potentially on the chopping block should frighten New Yorkers, he said.

"I would say the top priorities should be public health and the sorts of programs that help New Yorkers access job opportunities that are poised to grow," Dvorkin said. "I don't think it’s clear right now that the state views it that way."

Nearby, New Jersey's Garden State Guarantee, just announced in February and intended to build on other grants so students could attend four-year colleges tuition-free for up to two years, was withdrawn in May and removed from the governor's revised budget proposal, according to Nicole Kirgan, director of communications at the state's Office of the Secretary of Higher Education. ​

Maryland expanded eligibility for its Community College Promise Scholarship. But it ran out of funds for the students who applied, said Jim Fielder, secretary of higher education for the state.

During its first year, the program received $15 million from the state Legislature but only awarded $4.2 million to students. To broaden the number of students who applied for the program, the state removed the program's age restrictions, so adult learners could apply, as well as the work agreement, which required students to pay taxes in the subsequent year after they received the award, Fielder said.

The Legislature appropriated less money -- $11.5 million -- in the second year. Then the pandemic hit, and the state reduced the amount again to $8 million, he said.

All of the $8 million has been awarded to students. The number of awards for this academic year more than doubled over last year's -- but there are still more than 2,880 students on the waiting list.

The state gave out awards based on need, Fielder said. He's confident that the funding will be increased in the future, as the state's budget recovers from this recession.

"We have a goal that 55 percent of citizens over 25 will have a higher education degree or certificate by 2025," he said. "The governor is focused on the fact that higher education is a key to upskilling the workforce."

Different Funding Models

Leaders in some states are confident that their programs will be able to weather this storm.

The Tennessee Promise Scholarship hasn't had any cuts so far, said Mike Krause, executive director of the Tennessee Higher Education Commission and Tennessee Student Assistance Corporation.

Krause credits the program's funding structure. It receives funding through the state's lottery program, which is put into an endowment that is now at $600 million. Most of that is invested in the stock market, which did experience some turbulence earlier this year, but Tennessee's funds have fully recovered, Krause said.

The state is now launching a renewed marketing campaign for the program to ensure students know about the aid.

Krause has contingency plans for shortfalls, but the program isn't in that vicinity right now, he said. Its yearly budget estimates end up within $1,000 of the actual total budget numbers.

"There is inherent volatility in those programs but we also understand what the limits of those volatilities are," he said, referring to the lottery and the endowment.

The program is doing better than it has in enrollment. Total enrollment is up 6 percent over all, according to Steven Gentile, chief policy officer at the commission. Program renewals also have increased by 30 percent over last year.

"When you offer a program built on the notion of free tuition, what you’re really trying to do is build trust with students," Krause said. "If the program isn’t strong enough to survive economic shifts and market volatility, it won’t work."

The Detroit Promise in Michigan is also doing well. That program uses fundraising and just started receiving funds from tax recaptures this year.

"We are in pretty good shape because of the way we fundraise," said Justin Remington, director of operations at the Michigan Education Excellence Foundation, which funds the program. The foundation uses multiyear fundraising with several sectors to reduce financial risk.

The last-dollar program that helps students who attend high schools in Detroit pursue two- or four-year degrees at participating institutions should be fine for this academic year, and likely the next. But after that, it's a mystery, Remington said. The foundation is working with the city and state to determine the numbers for the tax recapture.

There aren't any contingency plans yet, said Greg Handel, vice president for education and talent at the Detroit Regional Chamber, which administers the program.

"It's difficult, with so much uncertainty, to plan for more uncertainty," he said. "Our focus is ensuring that students who are eligible are actually taking advantage of the program."

That's also been made difficult, as the program doesn't have direct access to high school students right now. Most are learning online, Handel said, so they are trying to find ways to reach students in this virtual setting. ​

Building Trust

Some other programs funded through state legislatures are doing OK, too.

The Community College of Rhode Island expects cuts to the operating budget, but hopefully not to the Rhode Island Promise program, which covers last-dollar tuition costs at the college for recent high school graduates.

"The governor has made her strong support of the program apparent by making it central to her financial year 2021 budget she released to the Legislature in January," said Meghan Hughes, president of the college.

The program has performed well during its pilot years, too, she said.

The 21st Century Scholars program in Indiana has also escaped cuts. Teresa Lubbers, the state's commissioner for higher education, credits the program's 30-year tenure that's proved its worth. Students enroll in the program in the seventh or eighth grade and have an 86 percent college-going rate, compared to 61 percent for students not enrolled in the program. They also graduate at higher rates, Lubbers said.​

"Our history is an advantage. We’ve been able to point to a pattern of success," she said. "I’d be hard-pressed to say there are any people who are talking about education in the state who aren’t familiar with the program. They know it would be very risky to walk away from such a successful program."

Many experts expect more programs to announce cuts or caps due to the recession. But different funding strategies may fare better than others.

The pandemic throws a wrench in things, though.

"There are steady streams of revenue for states that are not currently steady streams because we are in a pandemic," said Dominique Baker, assistant professor of education policy at Southern Methodist University.

Federal intervention will be key to states', and higher education's, recovery, she said.

Equity is at stake, she said. Promise programs could add administrative burdens, like extra paperwork or higher grade point average requirements, to reduce the number of students they serve, she said.

They also could switch to a first-come, first-served model, which inherently benefits higher-income students who know how to play the game, Kelchen said.

Programs that exclusively serve students attending community colleges may do better than others, as they cost less to run and sometimes get assistance from local governments as well, he said.

And while it's possible programs could be ended entirely, it's not very likely given their political popularity.

"Governors are proud of starting these programs," he said. "For example, as long as Andrew Cuomo is governor of New York, there will be an Excelsior Scholarship."

Programs that aren't protected by their model, like Tennessee's, will have to rely on federal assistance, Kelchen said. But it's likely that relief won't come until after the election. And if there's a change in administration, relief likely wouldn't come until the new year, he said, which could leave many promise programs' budgets for next year in limbo.

Martha Kanter, CEO of College Promise, a nonprofit advocacy group for free college programs, hopes this won't slow the movement down.

"The promise programs that I’m seeing around the country are continuing to struggle through the pandemic, but I haven’t seen a real retrenchment," she said. "I’ve seen smarter ways to try to stabilize, to look for fundraising or donors."

Programs that use endowments will be more stable, she said, as well as those that use private and public partnerships. But many states are still figuring out the best solutions for funding these programs.

"I would hope that when a state or a local community made a promise, that they had thought through ways of sustaining those programs," she said. "This is about our integrity. This is about what we’re saying to students."

Clear messaging is one of the biggest positives for these programs. If that messaging changes over time, it could create confusion, Mishory from the Century Foundation said. It can impact students who don't know what aid is available, who thought a promise program could work for them, only to find out the eligibility requirements changed.

Many of these programs come down to building trust, Baker said.

"I become really concerned when we tell students that if they do X, Y and Z, we’ll help them. And then, because of these exigent circumstances, we have to make changes to that," she said. "That erodes trust in government. This is a time when higher education and states can ill afford to erode trust."

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