Debt-Free College: California’s On the Verge of Spending Over a Half-Billion Dollars to Help 360,000 Students

California is on track to remove any reason for its public university students to take out student loans.

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Known as Middle Class Scholarship 2.0, the “debt-free” program is slated to receive its first infusion of money this summer: a cool $632 million that lawmakers and Gov. Gavin Newsom promised in last year’s state budget that they said they’d fund this year. 

If that money appears in the state’s budget this June, an anticipated 246,000 California State University students and 114,000 University of California students will receive this aid to help finance their educations starting this fall. Students at other California campuses, including community colleges, are ineligible.

The money will have an immediate impact on low- and middle-class students whose families generally earn less than $201,000. The exact amounts students receive will vary, but grants will range between $1,000 and just over $3,000 on average in the program’s first phase. Students in higher-income households will typically get the larger amounts to make up for the lack of aid they receive from other state and federal grants.

The awards reflect a portion of what students would get if lawmakers funded the whole $2.6 billion price tag. By committing $632 million this fall, the state is funding 24% of the program’s total cost, so each eligible student would receive 24% of the total amount they’d get were the scholarship fully funded.

Even at partial funding, those added dollars will likely lower student debt loads if lawmakers actually fund and maintain the program. Across the UC and CSU, students who borrowed federal loans and graduated in 2019-20 typically took out about $15,000, according to a CalMatters analysis of federal data. (Some students may also take out private loans or have their parents secure federal loans.)

Last year, lawmakers hailed the budget deal to fund the downpayment this year as something that will “ultimately eliminate the de facto requirement for lower- and middle-income students to rely on student loans to attend CSU and UC.” 

There is no schedule for when lawmakers will fully fund the scholarship.

“It will still fall short of … creating a real viable path to a debt-free, quality public degree in California,” said Jessica Thompson, vice president at the California policy group The Institute for College Access & Success.

Competing financial aid overhaul programs

While that first wave of money is likely a sure thing, it is still unclear whether the state will also expand its vaunted Cal Grant program to another 150,000 students as some lawmakers are currently seeking.

The decisions facing the Legislature and Newsom come down to somewhat competing but ultimately complementary visions of funding financial aid in California.

With the enhanced Middle Class Scholarship, which builds on an existing program, many students will definitely get something.

Expanding the Cal Grant program means another roughly 36,000 students would get their tuition fully covered at the UC and Cal States. An additional 109,000 community college students would receive non-tuition grants of $1,648, plus free tuition if they transfer to a UC or Cal State. 

Several thousand students at private colleges would also get awards. The expansion, which would be made possible under Assembly Bill 1746, would effectively remove all the eligibility barriers that advocates say have plagued the Cal Grant, the state’s chief financial aid vehicle. Roughly half a million students receive the Cal Grant already.

But those extra students result in new annual Cal Grant costs that rival the price tag for the Middle Class Scholarship overhaul.

The Cal Grant expansion will cost anywhere from $250 million to $350 million for the tuition waivers and community college student grants. Then there’s another $130 million to $150 million to fund the $6,000 supplemental grant that parents who are students receive if they’re already Cal Grant recipients, among other add-ons, for a potential total of $380 million to $500 million or more. 

Lawmakers of the Higher Education Committee unanimously approved the bill on Tuesday. About 40 students and advocates spoke in support of the bill by phone and in person, but it still faces a long road legislatively and in the state’s budget process. 

Click here to read the full article at CalMatters