New Mexico to provide free college tuition, governor says

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Free college tuition to state residents will stimulate New Mexico’s economy while equalizing opportunity in the nation’s second-poorest state, Gov. Michelle Lujan Grisham said Wednesday.

“In the long run, we'll see improved economic growth, improved outcomes for New Mexican workers and families and parents, a better trained and better compensated workforce,” Grisham said in announcing the proposal at New Mexico Higher Education Summit at Central New Mexico Community College.

“In the same way I insist on a transformation of early childhood outcomes in this state, I insist on the greatest higher education environment in the United States, and New Mexico is taking a giant leap forward with this proposal,” she added.

Grisham’s plan would cost between $25 million and $35 million yearly and would require legislative appropriations.

New Mexico would be the second state after New York to provide free tuition to in-state residents and the 21st state to provide free community college tuition.

Almost half of the states have guaranteed free two-year or four-year public college to some students, but New Mexico’s would not set parameters on income or require exceptional academic performance in high school. Neighboring Texas, for example, provides free tuition to students who graduate in the top 10% of their high school class. The University of Texas and Texas A&M University also have announced free tuition for students whose parents fall below certain income levels.

The new scholarship program that would impact an estimated 55,000 New Mexico students across the state’s 29 public institutions of higher education for the fall 2020 semester, a population that includes recent high school graduates, students who have earned a high school diploma equivalent such as a GED and returning adult learners.

Designed as a “last-dollar” program, the Grisham’s so-called “Opportunity Scholarship” would effectively cover any tuition and fees not paid for by federal grants or the New Mexico Lottery Scholarship, which typically leaves an unpaid tuition gap between 25% and 40% for college and university students, depending on the student and institution.

“Higher education in this state, a victim of the recession, has been starved in recent years,” Grisham said. “We are pivoting to a robust reinvestment in higher learning — specifically and directly in our students. By covering the last dollar of tuition and fees, by making college significantly more accessible to New Mexicans of every income, of every background, of every age, we are putting students first.”

New Mexico’s average in-state tuition and fees has increased 14% over five years to $6,620, according to the College Board. Out-of-state tuition and fees average $19,050.

The announcement comes amid declining enrollment at the largest New Mexico state universities. New Mexico’s per capita income is the nation’s second-lowest after Mississippi.

S&P Global Ratings placed a negative outlook on the University of New Mexico’s AA rating in May 2018.

"The negative outlook reflects the consistent declines in enrollment and the more than 20% drop in applications in fall 2017," said S&P Global Ratings credit analyst Mary Ellen Wriedt. "Additionally, the outlook reflects inconsistent operations, with the last two years being negative on a full-accrual basis."

S&P in September 2018 revised its outlook to negative on New Mexico State’s revenue bonds, rated AA-minus.

“A downgrade is possible if enrollment declines continue, the GAAP-based operating deficit is not reduced or the university's available resources become constrained and inadequate to support operations and debt relative to median ratios for the rating category,” S&P analyst Ken Rodgers wrote. “In addition, any increase in debt, while not expected, could pressure the rating.”

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