Getting a college education for free — sounds like a pipe-dream right? Well, New York state lawmakers have decided to make it a reality for students in their state thanks to a new state budget bill they just passed.
The new budget bill includes the proposal Gov. Andrew Cuomo (D-NY) announced this past January to make public colleges tuition-free for students and families residing in New York with household incomes of $125,000 or less each year.
So when Gov. Cuomo signs the budget into law, it will include funding for free college tuition. That means New York will be the first state to put a policy into action that grants free tuition assistance to students.
Here’s what the plan to give New York students free tuition looks like in action, and why Gov. Cuomo feels so strongly about it.
New York free college tuition is now a reality for eligible students
“College is a mandatory step if you really want to be a success,” Gov. Cuomo said in an announcement earlier this year.
He pointed out that while New York has more than 7.5 million jobs, 70 percent of jobs within the state require a college education.
“Society should say, ‘We’re going to pay for college because you need college to be successful,’” added Cuomo. “And New York State — New York State is going to do something about it.”
That’s why free tuition will be available to New York resident students attending two-year community colleges and four-year institutions throughout the state. New York currently has the largest public university system in the U.S., according to the Associated Press.
Tuition for eligible schools would be paid for through a fund called the Excelsior Scholarship.
“What Gov. Cuomo is proposing is a revolutionary idea in higher education,” said Sen. Bernie Sanders (D-VT), who joined Cuomo during his new policy announcement on Jan. 3. Sanders pushed for similar policies to make public colleges free during his 2016 presidential bid.
How the Excelsior Scholarship makes in-state colleges tuition-free
The Excelsior Scholarship program will cover full tuition and fees costs for in-state colleges starting this fall. Currently, the average annual tuition for four-year colleges in New York is $6,470 annual, and about $4,350 at two-year colleges.
These costs will be fully covered for students whose families meet the income eligibility requirements. These will be phased in over the next three years to reach the $125,000 mark. Here’s a breakdown of the income caps for free-tuition eligibility:
- 2017-2018 income cap is $100,000
- 2018-2019 income cap rises to $110,000
- 2019-2020 income cap will reach $125,000 and remain there
In addition to meeting the $125,000 income cap, students will also have to earn 30 credits a school year to receive the scholarship.
While the Excelsior Scholarship will cover tuition costs, there are other educational costs that families will still need to cover. For instance, it won’t cover room and board for students living on-campus, which can cost as much as $14,000 a year.
Additionally, graduates might have to limit their post-college job search to New York state. That’s because students who use the program to pay for college are required to live and work in New York state for an equal number of years that they received funding.
Students who benefit from the Excelsior Scholarship then move out of state after graduation will see their scholarship convert to a student loan.
Excelsior Scholarship could cost New York $163 million
It’s still unclear exactly how much the Excelsior Scholarship program will cost. New York state already has a tuition assistance program in place that provides up to $5,156 for grant recipients and costs $1 billion a year, according to the New York Times.
What’s more, 940,000 families have college-aged children and would qualify for the free tuition program. This could cost New York as much as $163 million by 2019. However, critics of the plan say that this projection is too low and that the bill will likely cost more.
Free tuition could lessen New York student loan balances
So how much would free tuition actually help students attending New York public colleges?
Currently, the average student loan balance for a New York graduate is $32,200, according to the Associated Press. In-state tuition, however, is around $6,500 a year — or $26,000 for four years. Therefore, students may still end up borrowing $6,200 to cover that gap.
That $32,200 balance, however, reflects loan balances for students of all New York schools, including high-priced private schools. So if tuition is covered, many students may find it easier to cover the rest of their college costs through part-time jobs and potential financial assistance from their parents.
And even if students receiving the Excelsior Scholarship do take on student loan debt, a $6,200 balance will be much easier for them to deal with than $32,200. That’s for sure.
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
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