I don’t think it will make SUNY less attractive.
Families who were at that 100k mark and were previously full pay at SUNY if their kid did nor receive a scholarship- STEM, Honors, etc. will now receive full tuition.
For this family, having the student take the $5500 loan and paying approx 10-12k out of pocket means that their kid can go away to school (if that is their choice).
It is at a cost that is still less than their FAFSA EFC. This may make SUNY more competitive especially at schools like, Bing, UB, Albany, Stony Brook, Geneseo, New Paltz, SUNY ESF (where students can take 15 credits at Syracuse as part of their SUNY tuition and receive a degree that has the Syracuse University Seal and the SUNY Seal).
Students will still be accepted to Honors Colleges, STEM incentive (which are given regardless of income) and EOP (for academically and economically disadvantaged students) at SUNY.
The problem that I see is that students may be using SUNY as a safety, especially if they can get free tuition and shutting out kids who are applying because they really want to attend SUNY.
Private colleges have the choice of opting in to the Enhanced scholarship program. Personally, I don’t see this happening if it means they have to freeze tuition for the 4 years that a student is in college to get $3k from the state.