by John Darer® CLU ChFC MSSC RSP CLTC
On April 9, 2017, the New York State Senate passed a budget that includes a $163-million annual initiative to offer free full-time undergraduate tuition at public colleges and universities to students with an annual family income of $125,000 or less. No age limit! The new program represents a first in the United States and includes students from many families whose income levels would be considered middle class.
The Excelsior Scholarship
It's called The Excelsior Scholarship and it was first proposed by New York Governor Andrew Cuomo in January 2017. The program is slated to be phased in over the next few years, but families earning $100,000 or less will be able to take advantage of the scholarship beginning with the Fall semester 2017 with increases in family income to be phased in $110,000 in 2018 and $125,000 in 2019. Students who qualify for The Excelsior Scholarship may avail themselves of a wide selection of colleges and campuses at City University of New York (CUNY) or State University of New York (SUNY). The State University of New York claims to be the largest comprehensive system of higher education in the United States, with 64 college and university campuses located within 30 miles of every home, school and business in the State of New York.
How Does It Work? What is the potential savings on tuition? When Will Excelsior Scholarship Applications Be Available?
An Excelsior Scholarship recipient can receive up to $5,500 from the Excelsior Scholarship, minus any amounts received for TAP, Pell or other scholarships. The remainder of your tuition charge will be covered through a tuition credit paid through SUNY or CUNY.
Are books, fees and room and board covered by The Excelsior Scholarship?
Other Eligibility Rules to Obtain and Continue to Recieve New York's The Excelsior Scholarship?
- Must be full time (i.e. 12 credits per term, 30 credits per academic year, including summer school). Important Note: Students with disabilities will not be required to register full time to be eligible for the scholarship at SUNY
- Must maintain the necessary grade point average to graduate on time.
- Must be a citizen of the United States, permanent resident or a refugee.
- Currently undocumented aliens are not eligible.
Do you qualify for The New York Excelsior Scholarship If Your Family Earns More Than The Threshold income?
If your family earns more than that, you don't get the scholarship. There is no sliding scale and the threshold does not take into consideration how many children are in the family.
Students Must Remain in New York For The Same Number of Years That They Received. Why?
If you receive the scholarship for 4 years a student must remain in New York for 4 years. If you don't remain then the scholarship is converted to a loan. Yuck!
Think about it, the Excelsior Scholarship is a costly program that potentially does a lot of good. By providing education that creates more job opportunities for more people to get ahead and potentially earn more money that can be taxed by New York State to finance the program is good business. The fact that there is no age limit expands the opportunity.
Settlement Planning Opportunities and Considerations With The Excelsior Scholarship and Collateral Benefits
- Potentially helpful on small to mid-size personal injury or wrongful death settlements involving minors as resources allocated to fund tuition could be deferred longer via a structured settlement to help fund graduate school, in New York (so your scholarship doesn't convert to a loan!).
- Consider as an example a minor's settlement involving a 15-16 year old. The short deferral period for a lump sum payments from a structured settlement at 18 or 19 is not cost efficient in the current environment, but payments beginning at age 22 to help pay for grad school may very well be.
- Let's take a look at the math. Assuming a 15 year old currently finishing freshman year in high school and expected to start college in 2020 and using the rates of Liberty Life Assurance Company of Boston for illustrative purposes, the estimated SUNY 4 year tuition cost, assuming $200 annual increases each year until and through the 4 years of college would be $29,480. That could be funded at current rates for for about $27,856. If the same amount of money were to instead pay only two annual payments to help with grad school starting July 2024, the total payout would be $33,058. The interest gain accumulated by using taking advantage of Excelsior and using the same premium to fund the graduate payments results in about 3.2 times more interest!
- Another option would be to take the same amount of premium generated by not having to fund the annual tuition starting with freshman undergraduate and fund a 5 year income stream after college graduation to help subsidize independence. A monthly payment of $586.09 ($7,033.08 annually) could be generated based on book rates of Liberty at time of posting.
- Given that there are no age restrictions, on the one hand a New York resident, possibly a single parent, who had a child or children at a very young age and may have curtailed some education to raise a family, has affordable options and can now go back to school and open a new world of opportunities for themselves and their families.
- On the other hand an ambitious senior could get a college degree, just like my maternal grandmother who went back to college after my grandfather died and earned her Bachelors at age 80.
- Be sure to consider the cost of room and board and fees not covered by the scholarship.
- Stop structured settlement cash now pushers dead in their tracks. As long as the student is willing to go to one of the many fine SUNY or CUNY schools this should seriously eliminate college tuition as an excuse to sell structured settlements. Regulators and judges reviewing transfer petitions will have to be on their toes.
What Excelsior Scholarship Does Not Cover
- Room and Board and Fees
- Graduate School
If you want to go to a non SUNY or CUNY university, or a school outside of New York Excelsior is not going to help. But if you want to maximize the resources you could attend undergraduate school in New York and one of the many excellent grad schools in New York and then if you like go for another degree at a non New York school.
Useful Resources About The Excelsior Scholarship and Other Financial Aid for Education