Social benefits for state’s students
Confounded by declining enrollment and the prospect of increasing tuition for faculty and staff salary raises, many higher education institutions in New Mexico would benefit greatly from an infusion of revenue. Up$tart, a new initiative being piloted at Northern New Mexico College in Española, will utilize software to bundle applications for social benefits for low-income college students and provide those funds. By integrating applications for federal benefits — the free application for Federal Student Aid (FAFSA, necessary for Pell Grants), the Earned Income Tax Credit, the Child Tax Credit, the Supplemental Nutrition Assistance Program, Supplemental Security Income and Veterans Benefits — Up$tart could increase student income as much as $3,297 on average.
Simplifying complex applications evolving through “silo” programs operated by different agencies is logical for students as well as universities. Students navigating different applications would better invest time in studies as opposed to the socialbenefit paper chase. As prospective beneficiaries throw up their hands in frustration and give up, they forfeit thousands of dollars in benefits. Wading through the bureaucratic “sludge” ultimately results in low benefit take-up rates. “Most programs designed to benefit poor people have participation rates of between 30 and 60 percent,” noted behavioral economist Cass Sunstein.
Universities also gain from bundling benefits. For 2016-17, the University of New Mexico had 11,495 Pell Grant recipients. Assuming Up$tart was fully operational and increased social benefits for Pell Grantees half of the amount above, UNM students would have generated $18.9 million. While Up$tart is free to students, institutions will be charged $5 per Pell Grant recipient. Subtracting Up$tart’s charge to UNM of $57,475, the return on investment is approximately 330 to 1. Similarly, New Mexico State University would have increased students’ income $16 million.
Increasing income for poor students increases retention as well as the prospect of graduation. A recent New York Times analysis of public universities revealed that both UNM and NMSU graduated significantly fewer students compared to universities with more aggressive anti-dropout policies. But this is not meant to be a critique of our two flagship universities. On the contrary, systemic support structures statewide like Up$tart have the potential to help all of our higher education institutions. “The most effective way for colleges to spend money may simply be to give it to students — not just to pay for tuition but also to cover living expenses,” the report concluded. Ben Castleman, an education professor at the University of Virginia, cited affordability as “probably the biggest factor” prompting dropouts.
Extrapolating to other New Mexico institutions, a 5 percent increase in Pell Grants, the EITC and SNAP would have generated $69 million in 2015 for New Mexico, all federal revenue. Arguably, the state leaves million-dollar bills on the sidewalk when New Mexicans are unable to access social benefits.
Like other revenue streams, including wages, charitable contributions, tax credits and federal grants, social benefits are essential for a flourishing public sector. Failure to access social benefits contributes to New Mexico being less competitive than neighboring states, such as Arizona, Texas and Colorado, which have become magnates for talent and capital. In 2015, the Measure of America ranked New Mexico and Nevada last in its Opportunity Index.
By enhancing access to social benefits, Up$tart would contribute to New Mexico’s prosperity, increasing student income, improving the college graduation rate and bolstering the state economy, a win-win-win scenario. We plan to make New Mexico not only the trendsetter, but the exemplar, in providing more access to higher education for low-income students across the nation.