Recently we learned that a flag university in the state of WI has offered a free-tuition for all first-year students starting in the Fall 2018. The only condition applicants have to do is to apply financial aids through FAFSA.

Here are several points that prospect students and their family need to think about before taking the baits.

1. While the whole higher ed budget in that state has been cut, even some of the faculty members were let go, will the offer too good to be true?
2. Read the fine line carefully, the offer applies to all first year students.  The relevant question one might have would be what happens after the freshman year.  This has been a classic example of the bait-and-switch strategies that some of higher ed institutions have done in the past.
3. Perhaps, this strategy is one of the many efforts for the school to increase first-year student enrollments. Therefore, the enrollment department will have a pretty good metrics, and the boss will look pretty successful, but with the expense of the continuing students.  Once students get trapped, there are no other easy and cheap ways to get out.  School transfers can be very costly.  Basically, once trapped, a student has to wait another 3 years to complete her or his program, and worse thing is without or less financial aids money.  There is almost impossible for an institution who has experienced a budget reduction will be able to subsidize the whole first year students.
4. NCES data show the average tuition and fees charged by the institution in 2016-17 academic year is $25,230.00.  The average of freshmen year class is 3162 (Fall 2016).  The author mentioned 800 eligible students. Assuming no major change has occurred, it is easy to show the total annual subsidy amount equivalent to $80, 534,160.00 or $80.5 millions.  Which is about 40.15%  or 31.11% (see point #5 below) from the total institution’s core revenue  (2015-16 NCES’ reported figures) or 15.60% (use the author’s 800 student counts) will be used to subsidize the first year students.
5. Note that the fall-to-fall overall retention rate is 55%.  Let us use this fact instead as a comparison. Then the total subsidy amount is $62.4 million., which is smaller for some 45% first-year students will not be able to make it, and they will not return in the following spring semester.
6. Including in the core revenue are (1). Tuition and fees, (2). State appropriations, (3). Local appropriations, (4). Government grants and contracts, (5). Private gifts, grants, and contracts, (6). Investment return and (7). Other core revenues.  Yep, pretty much major cash-inlow sources are counted.

Based on the published NCES numbers above, it is up-to the readers to make their final conclusion.