State college promise programs, in which states offer free tuition to qualified students, have become increasingly common, but program design varies significantly. This brief examines how the structure of free college programs affects affordability for low-income students and models an alternative approach: a living stipend tied to financial need. We compare the effects of two tuition-focused programs—first-dollar and last-dollar programs—and three living stipend designs on students’ net cost of attendance.

Why This Matters

Living expenses are major costs that can make college unaffordable for many students, even if their tuition is low or fully covered. Focusing on making tuition less expensive is an important step in making college accessible and affordable, but college affordability efforts should also consider living expenses. First-dollar designs indirectly provide aid to many students for living expenses. But policymakers could address affordability challenges related to living expenses in other ways.

Key Takeaways

We estimate and compare the effects of a living stipend with the effects of first-dollar and last-dollar college promise programs. We also model three ways to design a living stipend and estimate changes in cost of attendance that would result from each. We find the following:

• Because low-income students already have grant aid that offsets tuition, last-dollar programs provide them little additional benefit—just $1,290 in median additional aid for the lowest-income students, compared with more than $3,000 for those with the highest incomes.
• A living stipend tied to Pell grant eligibility reduces the median cost of attendance for the lowest-income students by $1,200 more than a first-dollar program at two-year colleges.
• Because tuition is higher at four-year institutions, a first-dollar program reduces costs by about $1,700 more than a living stipend for the lowest-income students, but it also provides similar benefits to higher-income students, making it a less targeted use of aid.

Living stipends can be tailored to policy goals. We model three designs: one that mirrors Pell grant amounts, one that phases out faster to concentrate aid among the lowest-income students, and one that phases out more slowly to extend some benefit to middle-income students. Policymakers could use this basic structure to design a living stipend that aligns with their goals.

How We Did It

We use 2019–20 National Postsecondary Student Aid Study data from the US Department of Education’s National Center for Education Statistics. We analyze median tuition sticker price, median total grants received, median federal grants received, and median net living expense budget, adjusting each according to program design. We disaggregate the data by students’ expected family contribution. We limit the analysis to full-time in-state students enrolled in public institutions.