Education

Study: Free College Model Would Cost Arizonans $2.6 Billion

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Neetu Chandak Education and Politics Reporter
  • The Arizona Chamber Foundation and Rounds Consulting Group found that a free college model would cost Arizona an additional $2.6 billion that would be covered by taxes
  • Over 90 percent of students enrolled at an Arizona university received some sort of financial aid
  • Sales taxes or income taxes for individuals and corporations would need to increase by 50 percent to subsidize a free college program

A free college model would cost Arizona an additional $2.6 billion that would need to be covered by an “extreme” increases in taxes, according to a study released on Sept. 19.

The Arizona Chamber Foundation and Rounds Consulting Group found that either sales taxes or income taxes for individuals and corporations would need to increase by 50 percent in order to be able to afford a “free college” program in the state, according to the study “An Economic and Policy Examination of College Tuition Subsidy Proposals.”

“However, the gains from such a proposal would be limited, while the negative effects associated with the extreme tax increases would be devastating to the economy,” the study said. “This would include job losses and weaker overall economic growth.”

Universities in the state receive $2.2 billion from tuition and fees while community colleges receive $400 million a year from tuition. The $2.6 billion in additional state costs would take up one-quarter of the state’s general fund budget, according to the study.

“We have to invest wisely. If we put all of our money in one area, like free tuition, then we might not have enough money to spend in places like K-12 [education],” Rounds Consulting Group President Jim Rounds told The Daily Caller News Foundation over the phone. “We might not have enough money to spend in places like infrastructure. We might not have enough money to spend in all the different areas that make an economy tick, but we have to find a good balance.”

In-state students who attended Arizona State University (ASU), University of Arizona (UA) and Northern Arizona University (NAU) for the 2016-2017 school year on average paid a little over $4,000 a year on tuition even though the average ticket price was close to $11,000 a year.

Ninety-one percent of students enrolled at an Arizona university were offered financial aid as either a loan or a “gift aid,” which is money that does not have to be paid back and is given based on need or merit. Of the 91 percent who received some sort of aid, 71 percent received gift aids in fiscal year 2015.

“The default rate of students and alumni associated with Arizona’s public universities is also significantly lower than the default rate associated with federal loan borrowers at Arizona for-profit and two-year institutions,” according to the study.

The weighted average cost of community college in the state was $85 per credit hour, which was below national averages, the study reported.

The study comes as free college has either been proposed or implemented in various states.

Vermont Independent Sen. Bernie Sanders proposed “College for All Act,” which would get rid of undergraduate tuition at public universities and colleges across the country by giving each state $47 billion annually.

New York state currently has the Excelsior Scholarship, first proposed by Democratic Gov. Andrew Cuomo in 2017, which offers free tuition to middle-class college students who are residents of the state and attending either a two or four-year public university. A similar program for private schools called Enhanced Tuition Awards (ETA) program was also created to make the competition with tuition-free public schools fair. (RELATED: Doctors Call Out NYU Med School’s Free Tuition Announcement As Ignoring Real Needs)

“New York Legislature funded the program with $163 million spread over a three year period,” the study said. “It does not appear to have a dedicated funding stream past the initial three-year introductory period.”

There are over 230 “College Promise” programs that aim to offset college costs in the country, according to the study. The student loan national debt is $1.4 trillion.

Arizona Chamber Foundation focuses on research and initiatives that expand economic prosperity for the state while Rounds Consulting Group specializes in economics research that is used to advise public and private sector groups on policy and economics related issues.

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