ETV16 Provide a Fee Waiver in Lieu of a Cal Grant Award
Summary
All financially needy students attending a community college in California are eligible to receive a waiver of their statewide community college enrollment fee. A similar fee waiver program should be established for financially needy undergraduates attending the University of California (UC) and the California State University (CSU). Under this program, qualified undergraduates would receive a waiver of the system-wide enrollment fees in lieu of a Cal Grant award. This proposal would lower state administrative expenses and simplify the process of obtaining aid for parents, students and higher education institutions.
Background
The state's Cal Grant Program is administered by the California Student Aid Commission (CSAC). The program provided about $500 million in assistance to financially needy undergraduate students in the 2001-2002 academic year. [1] In the 2003-2004 academic year, the Cal Grant Program is expected to distribute about $670 million in grant aid to students. [2]
The program has four major types of grant awards. Cal Grant A award recipients attending UC and CSU receive a Cal Grant award that covers their system-wide student fees. Enrollment fees for Cal Grant A award recipients attending a community college are waived through the Community College Board of Governors Fee Waiver Program.
During their first year of college, Cal Grant B award recipients typically receive a "subsistence" allowance (currently set at $1,551 and adjusted annually in the Budget Act) to assist them with non-fee related college expenses. In subsequent years, Cal Grant B recipients receive the subsistence allowance and a grant award that covers their system-wide student fees at UC and CSU. Cal Grant B award recipients attending community colleges receive only the subsistence allowance, since their enrollment fees are waived through the Community College Board of Governors Fee Waiver Program. [3]The other two Cal Grant awards are Cal Grant C and Cal Grant T awards. Cal Grant C awards provide assistance to financially needy students pursuing vocational educational programs. Cal Grant T awards support financially needy students enrolled in fifth-year teacher preparation programs. [4] In the 2001-2002 academic year, 92 percent of Cal Grants were comprised of Cal Grant A and B awards. [5]
Prior to 2001, Cal Grant A and B award recipients were selected using a competitive statewide process. For each award category, eligible students were scored and rank-ordered according to the award's selection criteria. A cutoff score was determined based upon available funding for the program. Students whose scores met or exceeded the cutoff score and who met other basic eligibility requirements received an award. CSAC collected information regarding student grade point averages (GPAs) and financial resources, and used this information in conjunction with annual funding levels to determine the statewide cutoff score for each award. [6] CSAC played a central role in collecting Cal Grant applications, determining award status, communicating award status to students, tracking eligibility, and managing the payment process between CSAC and participating institutions. [7]
Beginning in 2001, the Cal Grant Program was significantly changed through enactment of Senate Bill 1644, Ortiz (Chapter 403, Statutes of 2000) that created two distinct methods of qualifying for Cal Grant A and B awards, each targeted toward a different segment of the college-going population:
- Entitlement A and B awards are now guaranteed to all recent high school graduates who meet predefined eligibility requirements. Each award type has a fixed minimum GPA requirement and a set of income and asset ceilings; [8] and
- Competitive A and B awards are awarded to students who do not meet the eligibility requirements of the entitlement program. New awards under this program are limited to 22,500 statewide. Applicants are scored, rank-ordered, and selected in a manner similar to that used for the pre-entitlement programs. [9]
In administering the Cal Grant Program, CSAC determines whether a student is financially needy and has met other eligibility criteria outlined in state law. The college or university at which the student is enrolled is also responsible for calculating a student's financial need and ensuring the student has met program eligibility criteria. This results in a duplication of time, effort and resources. Since colleges and universities are required to complete the needs analysis in order to determine whether the student is eligible for other student financial aid programs, the CSAC needs analysis and grant determination functions are duplicative and unnecessary.
A recent report issued by the California Postsecondary Education Commission identified several problems associated with the delivery of Cal Grant awards: [10]
- Students must interact with multiple entities-CSAC, their high school and the colleges to which they have applied for financial aid-to ensure that their eligibility determination is made based upon complete and accurate data;
- Many students receive award letters from CSAC that lack sufficient information about their financial aid package to make an informed decision about their education or choice of institution;
- Colleges and universities must administer a financial assistance program that differs significantly from the federal Pell Grant Program and every other major source of federal and institutionally administered student aid program;
- Much of the work performed by CSAC duplicates the work that financial aid offices already perform in determining student eligibility for financial aid programs and assembling aid packages; and
- While CSAC has worked diligently to improve many aspects of the delivery system, it is based upon a centralized model that was more appropriate for the pre-entitlement Cal Grant Program. This results in needless duplication and added complexity.
Many college and university financial aid directors support changes to the current program, noting that CSAC's "current administrative practices and reporting requirements are very cumbersome and time consuming in order [for institutions] to access funds to deliver to deserving students. No longer does CSAC need their workforce to apply need analysis as campuses have historically been the ultimate decision-makers in the determination of [student] eligibility." [11]
The most recent year for which relatively complete student financial aid information is available is for the 2001-2002 academic year. During that academic year, approximately 66,300 undergraduates were determined to be financially needy at UC and about 145,700 undergraduates were identified as financially needy at CSU. [12] Assuming that these financially needy undergraduates were all required to pay the full-time fee amount (recognizing that a few students would pay only the part-time fee amount since they were enrolled in fewer than six units), the system-wide fees for these students in the 2001-2002 Fiscal Year was about $227 million at UC and about $208 million at CSU.
In 2001-2002, undergraduates at UC received approximately $135 million in support from the Cal Grant Program and other state-administered student aid programs and $221 million in undergraduate institutional grant and scholarship support. [13] The existing Cal Grant aid levels, coupled with a relatively small portion of undergraduate institutional grant aid, would be sufficient to fully fund the proposed fee waivers at UC.
Undergraduates at CSU received approximately $83 million in support from the Cal Grant Program and other state-administered student aid programs and $130 million in institutional grant and scholarship support in 2001-2002. These two sources combined are sufficient to fully fund the proposed fee waiver program for all financially needy CSU undergraduate students. [14]
Implementation of the fee waiver program will result in lower state administrative expense and simplify the process for parents, students and postsecondary education institutions. Creation of the fee waiver program at the state's public universities should serve several beneficial purposes. The program would send a clear message to parents and students that fees will not be an impediment that prevents financially needy students from attending the state's public colleges or universities. The process of obtaining student fee assistance would be simplified by reducing the current application and paperwork requirements associated with the Cal Grant Program. Staff and related expenses associated with CSAC would also be reduced.
Recommendations
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The Governor should work with the Legislature to amend relevant Education Code sections replacing portions of the state's current Cal Grant A and Cal Grant B programs with a new fee waiver program at the state's public universities.
Specifically, the Education Code should be amended to provide a waiver of the systemwide student fees for all financially needy California resident undergraduates attending the University of California and the California State University. Under the amended law, these financially needy undergraduates should receive a waiver of system-wide fees in lieu of a Cal Grant award.
Beginning in 2006-2007, Cal Grant funds for financially needy students at California community colleges should be appropriated directly to the community colleges.
The Community College Chancellor's Office should allocate these funds to the community college districts based on the number of financially needy students enrolled in each district. Campuses should disburse these funds to financially needy students consistent with eligibility criteria outlined in California Education Code Section 69538.
Fiscal Impact
The savings displayed on the following table assume implementation of the new fee waiver program effective July 1, 2006. Approximately $5.6 million in savings are anticipated during the first year of implementation due to first-year costs associated with administrative changes required to convert from the current Cal Grant program to the new fee waiver program. After the first year, the fee waiver program is estimated to generate total annual savings of approximately $6.6 million to the Loan Operating Fund. These savings are derived entirely from reduced administrative and staffing expenses at CSAC. CSAC's current support budget for its grant programs is approximately $11 million. It is estimated that about 60 percent of that budget supports administration of Cal Grant awards for students attending the state's public colleges and universities. Implementation of the fee waiver program will likely result in the need for approximately 77 fewer CSAC staff positions.
Loan Operating Fund (dollars in thousands)
| Fiscal Year | Savings | Costs | Net Savings (Costs) | Change in PYs |
|---|---|---|---|---|
| 2004-05 | $6,600 | $1,000 | $5,600 | (77) |
| 2005-06 | $6,600 | $0 | $6,600 | (77) |
| 2006-07 | $6,600 | $0 | $6,600 | (77) |
| 2007-08 | $6,600 | $0 | $6,600 | (77) |
| 2008-09 | $6,600 | $0 | $6,600 | (77) |
Note: The dollars and PYs for each year in the above chart reflect the total change for that year from 2003-04 expenditures, revenues and PY's
Endnotes
[1] EdFund, "California Trends in Student Aid, 1992-93 to 2001-02," 2004, p. 16.
[2] EdFund, "California Trends in Student Aid, 1992-93 to 2001-02," 2004, inside cover.
[3] Edu. C. Sections 69435 and 69532.
[4] Edu. C. Section 69532.
[5] http://www.csac.ca.gov (last visited May 20, 2004).
[6] The Cal Grant GPA is basic measure of academic performance used to determine eligibility for a Cal Grant award. For applicants who are high school students, this GPA is based upon all coursework in grades 10 and 11 except physical education, ROTC, and remedial courses; it differs from the GPA used in UC and CSU admissions decisions as well as the GPA used by most independent institutions. For applicants who have already completed significant college or community college work, the Cal Grant GPA is calculated on the basis of all college work completed excluding nontransferable units.
[7] Then, as now, a student's preliminary award status was subject to change based upon their enrollment decision and institutional verification of student eligibility.
[8] Edu. C. Sections 69434-69436.5.
[9] Edu. C. Section 69437.
[10] California Postsecondary Education Commission, "Commission Recommendations on Alternate Delivery Options for the State's Cal Grant Program," February 2003, p. 13.
[11] E-mail message received by California Performance Review staff on (May 4, 2004).
[12] California Postsecondary Education Commission (CPEC), unpublished data provided by the University of California Office of the President and the California State University Chancellor's Office to CPEC, November 2003.
[13] EdFund, "California Trends in Student Aid, 1992-93 to 2001-02, 2004," p. 20.
[14] EdFund, "California Trends in Student Aid, 1992-93 to 2001-02, 2004," p. 22; and California Postsecondary Education Commission (CPEC), unpublished data provided by the University of California Office of the President and the California State University Chancellor's Office to CPEC, November 2003.