Unlikely to Expand Cal Grants This Year Due to State Budget Constraints

A highly anticipated expansion of financial aid in California, which was originally planned for this year, is now uncertain.

As part of California’s 2022 budget agreement, lawmakers had agreed to revamp the Cal Grant program, the main financial aid program in the state, in order to make it easier to understand. They also intended to expand eligibility to an additional 150,000 students, mainly those enrolled in low-income community colleges.

However, the implementation of the reform was contingent on the availability of sufficient state revenues. With California currently facing a budget deficit of at least $38 billion, Governor Gavin Newsom has not yet committed to providing funding for the reform. This raises significant doubts about whether it will be included in this year’s budget.

This uncertainty is a cause for concern among advocates for college access and students who believe that the current Cal Grant program is overly complicated and fails to support some of the state’s most economically disadvantaged students. Meanwhile, the cost of attending college continues to rise.

Despite the challenges, key lawmakers and other supporters are determined to push for the expansion of the Cal Grant program this year, even if they are unable to achieve all of their initial goals.

The Cal Grant program, which is California’s primary financial aid program, provides undergraduate students with grants of up to $13,752 per year for tuition and fees, depending on the college they attend. Students may also receive grants to cover living expenses. However, the program’s eligibility requirements and the amounts awarded vary depending on the institution. This complexity has been a point of criticism.

In his proposed budget for 2024-25, Newsom maintains funding for college financial aid in the state, including $2.5 billion for Cal Grant and $636.2 million for the Middle Class Scholarship. However, he has omitted a one-time funding increase for the scholarship that was included in last year’s budget agreement.

Assemblymember David Alvarez, chair of the Assembly’s budget subcommittee on education finance, has instructed his staff to examine each aspect of Cal Grant reform and identify what can be accomplished within the constraints of this year’s budget. He plans to hold hearings on the issue in the coming months.

“Increasing access to education for more students was a significant commitment,” Alvarez said in an interview. “If we need to take smaller steps in order to achieve that, I am open to considering it.”

The proposed reform involves several changes to the Cal Grant program. It aims to simplify the structure by reducing the number of awards from eight to two: one for community college students and another for students at four-year colleges. The current system has been criticized for its unnecessary complexity in awarding financial aid.

Under the new system, the process of earning a Cal Grant would be simplified. All aid would be guaranteed to eligible students, eliminating the current lottery-based system for some Cal Grants. In addition, more students would be eligible as certain requirements are eliminated.

For community college students, the minimum grade point average requirement would be eliminated. University of California (UC) and Cal State students would only need a 2.0 GPA, down from the current requirement of 3.0. Age cutoffs and the length of time since high school graduation, which currently prevent many older students from receiving aid, would also be removed.

Income eligibility would be determined based on the rules for federal Pell Grants. Students would be eligible for both awards if their family’s household income is low enough to qualify for a Pell Grant. The median household income for a Pell Grant-eligible student is approximately $59,000. Officials believe that using the Pell Grant as a benchmark for eligibility will increase the number of eligible students.

Eligible community college students would receive an annual grant of at least $1,648 to cover non-tuition expenses such as housing and food. Most community college students already pay no tuition. The grants for UC and Cal State students would cover the full cost of tuition, which will be $14,436 for in-state UC students and $6,084 for in-state Cal State students in 2024-25. Non-tuition expenses would not be covered by the grants, but students would still be able to seek additional aid from federal, private, and UC-administered sources to cover those costs.

According to estimates from the California Student Aid Commission, the proposed changes would expand Cal Grant eligibility from slightly over 340,000 students to approximately 492,000 students.

Expanding aid to such a large number of students would be expensive, particularly in the short term. However, it could have long-term financial benefits for the state. Jake Brymner, deputy director of policy for the California Student Aid Commission, argues that many students opt out of attending or fail to complete college due to the inability to afford it. He believes that expanding financial aid programs like Cal Grant is crucial for developing the state’s workforce and maintaining robust tax revenue.

Newsom’s staff has not yet ruled out the possibility of implementing Cal Grant reform this year. A spokesperson for Newsom’s Department of Finance stated that a determination would be made in May, as prescribed by the law, and no decision has been reached so far.

Nevertheless, the state’s revenue situation is concerning. Newsom announced during his January budget proposal that California is facing a $38 billion deficit, which is $30 billion lower than the estimate provided by the state’s Legislative Analyst Office. Lisa Qing, a policy analyst with the office, noted in an email that the financial projections do not currently meet the conditions required for triggering Cal Grant expansion under existing law.

However, Qing added that lawmakers have the power to modify the law, potentially creating alternative conditions that would enable Cal Grant expansion at a later date.

David Ramirez, the UC Student Association’s governmental relations chair and a member of the Cal Grant Reform Coalition, believes that negotiation is necessary. Ramirez finds it troubling that Newsom’s January budget proposal did not allocate any funding for the reform. He suggests that one possible solution could involve reallocating funds from the state’s Middle Class Scholarship program to support Cal Grant reform. Convincing lawmakers to reduce funding for the Middle Class Scholarship, however, could prove challenging. Ramirez recognizes the political considerations at play and intends to prioritize the needs of the state’s lowest-income students.

Ramirez added that another potential compromise would involve implementing some elements of the reform while leaving out others. The Cal Grant Reform Coalition is currently assessing and determining which aspects of Cal Grant reform should be prioritized.

The exact possibilities should become clearer this spring when Alvarez’s committee holds hearings on the topic.

“The commitment is to increase access to higher education for more students,” Alvarez affirmed. “That was the goal of Cal Grant reform. I don’t believe anyone has changed their mind about the importance of expanding access and reducing the cost of higher education for students.”