An Important, No-Cost Way to Improve Cal Grants
Thanks to California’s 2019-20 state budget, up to 15,250 more nontraditional college students will get a Cal Grant award each year – a big and much-needed increase to grant availability in a program that turns away hundreds of thousands of eligible low- and middle-income students each year. However, if past is prologue, many of these students still won’t be able to use their grants to take more courses, avoid taking on debt, or overcome the types of financial challenges that lead students to drop out mid-term.
That’s because many of the students won’t get a Cal Grant offer until after they’ve already made all their decisions about whether and how to enroll, and how to finance it. The number of grants that can be paid is capped in law, but there’s no way to know with certainty how many of the students who are offered grants will claim them and enroll in a given year.
Historically, available data show that Cal Grant “paid-rates” – the share of students offered grants who receive them – are fairly constant at about two-thirds. In other words, for every 100 students offered a grant, 67 will take it – perhaps the others are enrolled in an ineligible school or program, attend less-than-half-time, or they chose not to enroll at all. To pay out 100 awards, then, CSAC would have to make about 150 grant offers. But while the paid-rates are fairly constant, they are not precise, and in any given year more students than usual might accept the grant. For example, if 150 offers were made, and 102 of the offered students would want the grant, then California would be two awards over the number of grants it can pay.
Guided by a related state budget provision, the California Student Aid Commission (CSAC) can and does make more grant offers than it has available grants, acknowledging that some awardees won’t use the grant. However, they do so conservatively since there’s no way to know with certainty how many of the students who are offered grants will use them. When grants remain after offers have been made, CSAC will “recycle” the grants by offering them to a new batch of eligible applicants. This cycle repeats throughout the year until all available grants are paid out.
This creative workaround has allowed CSAC to pay out all available grants, important progress from years ago when thousands of grants each year went unused. However, it also means that many of the grants are not reaching eligible students until well into the academic year. In 2018-19, more than 2,000 awards were still available in March, and more than 1,000 still remained unpaid in May, for the academic year that ended in June. In 2017-18, hundreds of grants were paid out to students in July and August of 2018 – after the academic year had ended.
Financial aid is intended to facilitate students’ success, by providing resources needed to pay for costs being incurred throughout the year without relying on excessive work hours. But it cannot do that when students are not offered the aid until the year is nearly over. In a prior TICAS survey of California community college students, 66 percent of financial aid recipients said they would be extremely or very likely to enroll in more college credits if they got more grant aid. In that same survey, 27 percent of students said they would likely drop a course if they could not afford the textbooks. These are the exact challenges financial aid is intended to address, but it is of little use when it arrives months after these types of decisions have been made.
Additional Solutions Needed
Since 2017-18, the state budget has explicitly authorized CSAC to make a higher number of initial grant offers to get closer to full take-up at the beginning of the year when students need the grants most. But this effort has clearly not gone far enough. For one, the initial offer number is not high enough: for 2019-20, CSAC can make 51,000 offers for 41,000 grants. Additionally, the language does not address CSAC’s concerns about the penalties they might face if the awards paid out in a given year exceed the statutory cap, which is at the heart of the issue.
Legislation passed in 2014, AB 1976 (Quirk-Silva), would have given CSAC the authority to offer more awards by turning the annual award cap into a more flexible target. The bill included a safeguard that would have allowed CSAC to correct in the following year if the number of grants paid exceeded the target. Former Governor Jerry Brown vetoed AB 1976, on the grounds that CSAC could address the issue administratively. He was partially correct, as demonstrated by CSAC’s successful efforts to pay out more grants each year. But there is no question that CSAC needs legislative authority to exceed the cap on paid awards in some years, as long as they balance the total awards from year to year.
Whether through budget language or through standalone legislation, this issue urgently needs fixing. Importantly, solving the problem should not carry new costs for the state; CSAC is already paying out all available awards, and this would not increase the number of grants expected to be paid each year. But enabling the grants to reach students earlier – to help them enroll in more courses and stay enrolled in them throughout the year – would better maximize the value of the state’s financial aid investment.
