A quick rant on NY’s Excelsior Scholarship

Long Island Business News had a cover story last week: “Free for all?

And the answer is no.

NoL readers don’t need to be reminded that there ain’t no such thing as a free lunch. But I want to focus on the “for all” aspect. And the answer there is also no. This is a program that benefits the middle class and simply won’t be available for the poorest kids in the state.

There are a lot of different programs for paying for schooling costs, and I don’t want to get bogged down in specifics. So here’s (roughly) how this new program works: full time students whose family income is below (approximately) the 75th percentile get more money for school. That money goes away if they stop meeting those criteria.

This is not going to be helpful to poor students who don’t have to resources necessary to go to school full time. It sounds inclusive, but they might as well make the income requirement family income between the 60th and 75th percentile.

In the best case scenario, we might end up getting a positive return on this program (generating more tax revenues from more productive workers). But we still have to ask about what alternatives were possible.

Here are three problems with that outcome:

  1. If those kids were going to go to school anyways, then we’re just creating a common pool problem where costs and benefits aren’t compared by the relevant decision makers.
  2. If some of those kids weren’t going to go to school otherwise, then we’ve increased the pressure on poor kids to get a college degree without helping them out. And if we’re thinking of this like an investment, the returns would be higher on getting more poor kids to go through school.
  3. If this program doesn’t have a return on investment high enough to offset the costs, then that budget line has to compete with some other program (tax returns would be nice, or investment in infrastructure, or something else).

I don’t expect any legislation to solve the problem once and for all. But this program is more likely to make the underlying problems worse, at the expense of poor people, and with little net gain. Not only is this bad economics, it’s not even in line with the more honorable goals of progressives. It’s simply a way for politicians to buy votes with other people’s money.

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