Hildreth Institute Conducts an Equity Analysis of the "Millionaire's Tax" Impact on Higher Education Funding
FOR IMMEDIATE RELEASE
Wednesday, January 10th, 2024
CONTACT: news@hildrethinstitute.org - (617) 752-3701
“Boston, MA — The Hildreth Institute, a trusted source of independent research focusing on higher education, today released an extensive explainer detailing the distributional impact of the recently announced tuition-free initiative made possible by leveraging revenue from the new fair share surtax, commonly referred to as the "millionaire's tax". This analysis uses an equity lens and a student-centric approach to assess the distributional impact of this significant educational investment, reflecting the institute’s ongoing commitment to promoting equity and success in higher education.
“The analysis indicates that while this unprecedented investment will enhance affordability for low-to-moderate income students at four-year public higher education institutions, only a limited number of community college students will benefit from increased grant aid. This is largely because existing federal and state grants already cover tuition, fees, and book expenses for many low-income students, particularly at community colleges.
“While this initiative achieves equality by covering the remaining tuition, fees, and essential materials for all low-income students, the Hildreth Institute recommends that the state further enhance its strategy by emphasizing equity in distribution of aid. As decision-makers consider next year's budget, an equity-focused financial aid initiative would recognize and address the diverse unmet financial needs of low-income students, particularly those at community colleges. These institutions often serve vulnerable populations, including many low-income adult students with families, who, despite lower tuition and fees, still face significant financial challenges due to their life circumstances.
“Dr. Bahar Akman Imboden, the managing director of Hildreth Institute explains “Currently, under the last-dollar grant structure, this tuition-free program is regressive. That is, lower-income students will receive little or no additional aid from this new investment, as their direct costs are already covered by their existing grants. In contrast, students approaching the $100,000 income threshold will experience a significant increase in aid, up to $3,000. This underscores the need for a more equitable aid approach, one that provides balanced support across the entire spectrum of financial need.” The analysis excluded the University of Massachusetts' campuses due to data limitations; however, it is estimated that UMASS students, who face higher tuition and fees, are likely to receive even larger grants from this tuition-free expansion.
“The Hildreth Institute also reiterates its call for the simplification of the State’s financial aid system. The new initiatives introduced in the FY24 budget—MASSGrant Plus Expansion, MASSReconnect, and Tuition-Free Nursing— add to and overlap with an already complex system of 40 small grants, scholarships, and tuition waivers. With the increased funding available, there is an opportunity for the state to consolidate these small, targeted programs that overlap with the larger ones being created, thereby streamlining the messaging to clearly communicate to students the financial aid available for public higher education. This consolidation would likely boost enrollment and make higher education more accessible, equitable, and transparent.
“Hildreth Institute’s recommendations for future iterations of a more equity-focused affordability initiative include:
Extending Financial Support for Indirect Costs: Addressing the unmet needs for indirect costs is essential for lower-income students, particularly those at community colleges, to pursue higher education.
Implementing a 'First-Dollar Tuition-Free' Grant Program: This approach covers full tuition and fees upfront, enabling students to use existing grants and scholarships for indirect costs, thereby making higher education more affordable.
Introducing a 'Middle Dollar Grant': alternatively, this approach provides a fixed minimum grant to assist students whose tuition is partially or fully covered by existing grants, addressing the regressive nature of the current system.
Utilizing the Student Aid Index (SAI): The SAI can offer a nuanced perspective for assessing financial needs, enabling the state to target aid more effectively.
Consolidating Financial Aid Programs: Simplifying the array of financial aid options into a more understandable and accessible program is crucial for effective communication and utilization.
“The explainer is accessible here. It serves not only as a valuable resource for stakeholders and practitioners in higher education, providing detailed insights into the operational mechanics of the new tuition-free program at community colleges and state universities, but it also plays a crucial role in assessing the overall equity impact of the program. By identifying both the beneficiaries and those less favored, as well as various potential complexities, it presents key recommendations that are vital for guiding enhancements and fine-tuning in subsequent iterations and expansions of the program.”
About Hildreth Institute:
The Hildreth Institute, a trusted source of independent research, is committed to driving systemic change in higher education by promoting affordability, accountability, and equity, empowering advocates and decision-makers with student-centered, equity-driven policy analysis, thereby fostering an inclusive and transformative educational landscape.
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