Cal Grants

The California state budget signed last week will make an important down payment towards college affordability for the state’s most financially strapped students.  The agreement includes a long-overdue increase to the Cal Grant B access award, which helps California’s lowest income students pay for books, supplies, transportation, and other non-tuition costs of attending college. Under the new budget agreement, the award would increase from $1,473 to $1,648 – a much-needed step in the right direction after decades of stagnation and a recent cut.

The students who receive Cal Grant B access awards typically have family incomes well below the federal poverty line and attend all types of colleges.  Yet the purchasing power of this award has declined dramatically even as college has become less affordable for all students and families. Had the award kept pace with inflation since it was created in 1969, the original $900 award would be worth about $6,000 today. In 2012-13, low-income California college students had to put three times as much of their discretionary income towards net college costs (total costs after subtracting grants and scholarships) than did higher income students.

The increase to the Cal Grant B access award is welcome news to a statewide coalition – including civil rights, college access, and business groups, and every statewide student association – that has recommended increasing the Cal Grant B access award so that our state financial aid policies do not leave low-income students even further behind. Importantly, the budget also enables Cal Grant recipients who lose eligibility for renewal grants because their financial situation temporarily improves to later regain eligibility if their finances worsen, fixing an unintended consequence of the 2012 Budget Act.

To be clear, these financial aid changes are not a silver bullet for solving the college completion crisis and equity gaps that plague our state, or even the affordability challenges facing low-income students.  Even at the new level of $1,648, the Cal Grant B access award will still be worth far less than it was a generation ago: it will not even cover the estimated cost of books and supplies ($1,746) let alone other educational expenses. Furthermore, far too many Cal Grant eligible students will continue to be turned away because there simply aren't enough grants for those who don’t enroll in college right after high school or miss the application deadline.  Still, the Cal Grant B increase is a crucial step in the right direction, and we applaud the California Legislature, Assembly and Senate leadership, and the Governor for making a smart investment in California’s future.

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California college students who meet Cal Grant eligibility requirements are guaranteed a Cal Grant if they’re recent high school graduates who meet the application deadline. But students who apply for a grant more than one year after finishing high school or who miss the application deadline face a starkly different reality. Just 22,500 Cal Grants for these students – called “competitive” Cal Grants – are authorized each year. And for 2013-14, there were 16 eligible applicants for every authorized award.

In other words, an eligible applicant’s chance of receiving a competitive Cal Grant is about 6 percent. Wondering how that stacks up against other notoriously long odds? We did some digging and found that it’s tougher for an eligible student to earn a competitive Cal Grant than:

• for a gambler to win in a Las Vegas casino (13 percent);1 or

• for a high school senior who applies to Ivy League colleges to actually get into one (9 percent);2 or

• for a college baseball player to get drafted by a Major League team (9 percent).3

Getting financial aid shouldn’t be harder than beating the odds in Vegas, getting into the Ivy League, or making the majors. The hundreds of thousands of eligible students denied Cal Grants have an average family income below $21,000 for a family size of three, and an average GPA of 3.0. The odds confronting these students are far too long, and the losers far too deserving, for policymakers to continue accepting the status quo. Parallel efforts are underway in the California State Assembly, via this year’s budget negotiations and Assembly Bill 1976 (Quirk-Silva), to increase the number of competitive grants available and ensure that all authorized grants are actually getting to students. Putting our money on high-achieving, low-income students isn’t just a safe bet – it’s an investment with great returns for California. - Matthew La Rocque

Across all games and tables in the Clark County Downtown Las Vegas area, the average win percentage is about 12.8 percent. For slot machines, the average win percentage is about 6.7 percent. State of Nevada. State Gaming Control Board. Gaming Revenue Report. December 31, 2012.

Among applicants for the Class of 2018, the aggregate admissions rate across the eight Ivy League colleges was about 8.9 percent. Washington Post. March 28, 2014.

About 9.4 percent of NCAA senior male baseball players will get drafted by a Major League Baseball (MLB) team. NCAA Research. Estimated Probability of Competing in Athletics Beyond the High School Interscholastic Level. 2013.

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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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The California Governor’s budget proposal includes much to like for higher education. Deepened investments in public colleges and universities, as well as a fund for innovation in higher education, will serve to keep tuitions steady and make it easier for students to transfer and graduate on time. Community college students will benefit from expanded educational planning services and a focus on closing achievement gaps.

The budget plan also includes one narrow but very important improvement to the state Cal Grant program, the largest need-based grant aid program in the nation. Students who become ineligible because their family income rises above Cal Grant thresholds will be able to reenter the program should their income drop again. This modification is very similar to a bill introduced by Assembly Member Quirk-Silva last year (AB 1287), supported by TICAS and every statewide student group.

The Governor acknowledges that college affordability is a “critical outcome,” and there is a broad and growing consensus on the need to strengthen the Cal Grant program so that our lowest income students aren’t left behind. We had hoped the plan would have included more steps to increase the availability of need-based financial aid, which makes college more affordable for low- and truly middle-income students. While the plan points out that Cal Grants and community college fee waivers help to keep college within reach for some low- and middle-income students, many students continue to be left out of those programs, and many of those who receive Cal Grants get awards worth just one-quarter of their original value.

As expected, the budget plan does reflect last summer’s agreement to create a new non-need-based Middle Class Scholarship, with $107 million allocated for 2014-15. We continue to believe that the Legislature should consider improvements to the Middle Class Scholarship program to align it with longstanding state and institutional aid programs and target available dollars to students with at least some financial need.

We look forward to working with the Governor and Legislature to ensure that all of the state’s higher education investments work in tandem to increase college access and success. 

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Tomorrow or Saturday, the Legislature will vote on the 2013-14 Budget Act. Included in the budget at the behest of the Assembly Speaker, and agreed to by the Senate pro Tempore and the Governor, is a new Middle Class Scholarship Program. Once fully phased in, the program is projected to cost $305 million annually and offer tuition discounts to students with family incomes likely between $80,000 and $150,000.

But California already has a middle class scholarship. The Cal Grant program, the state’s need-based financial aid program, serves students with family incomes up to $83,100 (for a family of four) – well above California’s median income.  Still, many of our most financially needy college students – those with family incomes below the federal poverty line – are either completely un-served or dramatically under-served by the Cal Grant program, despite the common belief that the state is meeting their needs. Less than one-quarter of California’s very low-income students who apply for aid receive a Cal Grant. A major cause is there just isn’t enough money appropriated to the Cal Grant Program to serve all eligible students.

With hundreds of thousands of low- and truly middle-income students facing severe cost barriers, why throw hundreds of millions of dollars at a new program to help students from families with incomes as high as $150,000?  Investing that money in Cal Grants would get a far bigger bang for the buck. Higher income students are already on track to attend and graduate from college, while lower income students face such large financial obstacles that they drop out, graduate in lower numbers, or fail to attend altogether.

The fiscal priorities contained in the budget agreement are disheartening. However, legislation pending in both the Senate and the Assembly would restore recent cuts to already inadequate grants for the lowest income recipients and increase the availability of awards for both low- and middle-income students. Putting more money into the Cal Grant program would go a long way towards better serving middle-income students. And low-income students would be better served, too.

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Today Governor Jerry Brown introduced his proposal for the 2013-14 state budget. His proposal outlines laudable and critical goals for higher education: making the state’s public colleges more affordable; increasing the number of Californians who complete a degree or certificate; decreasing the time it takes to get through school; and improving transfer rates. Importantly, he proposes no policy changes to the Cal Grant program, which serves hundreds of thousands of California students. However, as described in the budget summary, some of the policies he proposes may be at odds with his stated goals.

For instance, the Governor proposes limiting the number of units for which students can receive a state General Fund subsidy (either through appropriations to colleges or financial aid), beginning in 2013-14. Students should be able to take appropriate courses and earn degrees in a timely fashion, and there needs to be a shared responsibility for doing so. But in the Governor’s proposed budget, the responsibility appears to fall primarily on students, and the details on what will be expected of colleges are much less clear. And if the proposal were to be applied retroactively, to students continuing in 2013-14 rather than those newly enrolling for 2013-14, it would only serve to further penalize the many students who have been stalled by widespread college capacity problems.

Similarly, there are merits to requiring a federal aid application for California community college (CCC) students seeking Board of Governor (BOG) fee waivers, particularly with the availability of the state Dream Act application (which we presume would count under this proposal). Unfortunately, the CCC financial aid offices that administer this program are woefully underfunded, so much so that federal and state aid is being left on the table. Without providing additional resources for colleges to support students’ FAFSA completion, fewer students will likely receive BOG waivers – simply because the FAFSA presents a significant hurdle, and one that CCC financial aid offices are not adequately funded to address.

We urge the Legislature to address these potential pitfalls in the coming months by focusing on the goals outlined by the Governor, and ensuring that policies enacted do not have such unintended consequences for students.  

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The passage of California’s Proposition 30 last month protected both K-12 and higher education from another round of severe cuts. This good news also creates an opportunity to reflect on how state resources can best ensure access and support success for the state’s current and future college students. To that end, we've been analyzing how the Cal Grant program is serving California’s college students. See our full Cal Grant Snapshot here.

We found that for 2012-13, there was only one Competitive Cal Grant available for every seventeen eligible applicants – up from one in seven in 2006-07. (While all eligible recent high school graduates receive a Cal Grant, otherwise eligible older students and students who did not apply by the March 2nd deadline must compete for a very limited number of grants.) We also learned that only about one-quarter (23%) of very low-income students who applied for federal aid received a state grant. And for those few very low-income students who do receive a Cal Grant, the stipend to cover educational costs beyond tuition has failed to keep pace with inflation and is now at a quarter of its original value.

TICAS research director Debbie Cochrane highlighted these and other findings at the California Student Aid Commission’s strategic planning session last month. Her comments on the state of Cal Grants and where the Commission can play a unique role can be read in its entirety here.

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In January, California Governor Jerry Brown proposed a state budget that included $300 million in cuts to the state Cal Grant program, including greatly increasing the high school grades students must have to receive grants and cutting the maximum awards at private colleges.  His updated proposal released earlier today includes modest additional cuts, which we appreciate given the extent of the budget difficulties the state is facing.  Should cuts to Cal Grants be necessary, his stated priorities for the program – protecting affordability at public colleges, focusing assistance on the neediest students, and directing dollars to colleges where students are better served – are admirable and appropriate.  The limited new cuts he is proposing, to restrict Cal Grant awards to colleges where more students graduate (at least 30%) and fewer borrowers default (no more than 15%), are well aligned with these priorities, as are some but not all of the cuts originally proposed in January.

We are disappointed that the Governor retained his earlier proposal to cut student eligibility by substantially increasing the high school grades required for Cal Grants.  Our analysis has found that this cut would disproportionately affect African-American and Latino students, leave multiple years of high school students high and dry by changing the rules mid-game, and pressure students to choose between taking challenging coursework and getting financial aid for college.  The proposal’s effect on Cal Grant B awards in particular is so extreme that more than four in 10 currently eligible applicants would no longer get the grants they’ve been counting on for this fall.  Even the Legislative Analyst’s Office, which has previously raised questions about appropriate GPA requirements for Cal Grants, believes the Governor’s proposal is too harsh and abrupt.

Importantly, the Governor also proposed other major changes to the way Cal Grant eligibility and award levels are determined, although details are still forthcoming. (UPDATE: Here is the quick analysis we did once details of the Governor’s proposal became available.) While not technically cuts for the 2012-13 year, these changes have the potential to dramatically alter the course of the Cal Grant program.  Currently, Cal Grants are “all-or-nothing” grants, provided to students who fall below income and asset ceilings.  To understand what this means, consider a student from a family of four attending the University of California.  Whether her family income is $40,000 or $80,000, she gets a flat Cal Grant worth more than $13,000 – but nothing if her family income is $81,000.  Whether or not this is the most efficient and equitable way to deliver Cal Grant dollars, and whether there are alternatives worth considering, are reasonable policy questions.  However, these questions require more than a couple of weeks to address, as the answers could fundamentally change the structure of the program and how effectively it supports both access and success.  Hasty decisions could lead to harsh and unintended consequences for the state’s students and families for many years to come.

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Last week, the Assembly Budget Subcommittee on Education Finance rejected, on a bipartisan vote, the Governor’s budget proposal to limit Cal Grant eligibility by raising minimum GPA thresholds. As we have discussed before, these changes would lock out more than a third of applicants now currently eligible for Cal Grants.  We applaud the Subcommittee for taking a strong stand in defense of financial aid, and sending a clear message that the state won’t get ahead by leaving students behind.

The committee vote was taken at a hearing in which TICAS Program Director Debbie Cochrane was invited to testify, and where she shared that the GPA proposal would disproportionately affect underrepresented students and cut off grant aid from students who can and do succeed in college.  Using new data obtained from the California Student Aid Commission and the state's public segments of higher education, we found that these cuts would hit African-American and Latino students particularly hard. Almost two-thirds of 2010-11 new Cal Grant recipients with GPAs below the proposed new thresholds at public colleges are African American or Latino. Our testimony also documents that Cal Grant students – including those with GPAs below the proposed new thresholds – are succeeding in college, outperforming other community college students in persistence and ability to earn 30 units, and graduating at about the same rate as other students at CSU and UC.

While the committee’s action is a welcome sign, these proposals – and other harmful cuts to Cal Grants – will continue to be debated throughout the next few months. We will continue to analyze and communicate the effects of this and other Cal Grant proposals, as well as the importance of investing in need-based financial aid, as the process moves forward.

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Since Governor Brown released his proposed 2012-13 budget three weeks ago, we’ve delved further into what the proposed Cal Grant cuts would mean for California’s students and families. Our further analysis reveals just how damaging one of the cuts – which would raise the grade point averages needed to qualify for Cal Grants – would be.

The dramatic changes proposed by Governor Brown would lock out more than a third of applicants currently eligible for entitlement grants. These are students who have worked hard and earned the grades that the state has long promised entitled them to participate in California’s primary student aid program. These are also the students, research shows, for whom financial aid may make the biggest difference in terms of helping them persist and succeed in college. As they finally reach the point where they are ready to go to college, many will find their dreams shattered.

Three out of four applicants cut out would be prospective Cal Grant B students, who on average have family incomes well below the poverty line. And the majority of these students go to community colleges, where students receive too little aid and are already less likely to receive state grants.

At a time when the nation needs more college graduates, cutting financial aid for the students who most need it to succeed is penny-wise and pound-foolish. See more details on how this cut would affect California’s students and their families here.

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