Helping the Lowest Income Students Will Have the Highest Returns: What the California Legislature Can Do Right Now to Strengthen Cal Grants

This week, the California State Assembly and Senate will hold budget subcommittee hearings on higher education, including Cal Grants – the state’s need-based financial aid program. The subcommittees are expected to vote on spending plans for the 2014-15 budget year. And unlike recent budget years, the Legislative Analyst’s Office projects a general fund surplus of "several hundred million dollars."

Cal Grants help thousands of students get to and through college, but even so, college remains least affordable for California’s lowest income students, regardless of what type of college they attend. At UC, the lowest income families pay a whopping 64 percent of their discretionary income* to cover college costs, while the highest income families pay 21 percent. (For more, see our testimony from the Assembly Budget Subcommittee No. 2 on Education Finance and Senate Budget and Fiscal Review Committee, Subcommittee 1 on Education hearings this past March.)

 Cal Grant 5.20

*Discretionary income recognizes that some family resources must go toward basic needs.  Here, discretionary income is defined as income below 150 percent of the poverty level for a household of one.

 We urge the legislature to improve college affordability for low-income students at all colleges by strengthening the Cal Grant program in two key ways:

(1)  Increase the size of the Cal Grant B access award, which helps students at all colleges limit their work hours and focus on their studies. At just $1,473, today’s access award is worth just one quarter of its original value and doesn’t even cover the average cost of books and supplies.

(2)  Serve more Cal Grant eligible students. Every year the state turns away hundreds of thousands of eligible applicants because there aren't enough competitive Cal Grant awards: in 2013-14, there were 16 eligible applicants for every available award. Competitive award recipients tend to have higher GPAs and lower incomes than other Cal Grant recipients. Those turned away have an average family income below $21,000 and a family size of three.

These two improvements would go the farthest to improve access and success for low-income, underserved students at all types of colleges. These are the wisest financial aid investments California could make, and the time to make them is right now.

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