Gov. Jerry Brown approved Senate Bill 70 (SB 70) on March 24, 2011, which has continued into this year. The bill, along with other budget-related bills, was signed in an effort to save on state spending.
According to the California Department of Finance, SB 70 was the omnibus education trailer bill.
“It included everything from community college fee increases, deferrals for both K-12 and community colleges, Cal Grant reductions, revenue limit deficit factors and everything else needed to implement last year’s March budget,” the department said.
The Enrolled Bill Report stated the education trailer bill would make various reductions, referrals and appropriations needed to bring California Proposition 98 (Prop. 98) guarantee to minimum funding level for K-14 education required for the 2010-11 and 2011-12 fiscal years. In addition, it allowed for changes necessary to implement the Budget Control Act of 2011.
According to the report, SB 70 increased community college fees from $26 per unit to $36 per unit to create $110 million in fee revenues that support community college apportionment funding.
“The bill would generate an estimated $124 million General Fund savings via programmatic changes to the Cal Grant program,” the Enrolled Bill Report stated. “It would also require the University of California and California State University to report on their recommended options for addressing the $500 million reductions reflected in the Budget, based on input provided by the stakeholders, prior to adopting a final plan.”
Changes to the Cal Grant program signified a change in Cal Grant eligibility requirements for both students and institutions.
SB 70 states that to be eligible for the Cal Grant as a student, recipients will need to meet maximum income and asset ceilings and a minimum financial need requirement, which formerly applied to only initial Cal Grant recipients. Regarding institutions, SB 70 requires them to have at least 40 percent of their undergraduate students borrowing federal loans to have a three-year cohort default rate of less than 24.6 percent to be eligible for new and renewed Cal Grants for the 2011-12 academic year, and less than 30 percent for each subsequent year.
A cohort default rate is the average default rate of students who enter repayment on loans taken out during a fiscal year and default, or fail to repay a loan, prior to the end of the next fiscal year.
Institutions affected by this change in Cal Grant eligibility are mainly vocational colleges, with four Kaplan College campuses not qualifying for Cal Grant awards for the 2011-12 academic years.
“Schools with high default rates of over 25 percent are on the ineligible list to receive Cal Grants for two years,” said Director of Financial Aid for the Sacramento Campus of Kaplan College Ryan Smith. “So that’s pretty much about 90 percent of the vocational schools in this area.”
Smith said it is a negative impact, but some schools are taking this in stride by matching the Cal Grant and awarding them to students eligible for the Cal Grant.
“We will re-establish our eligibility and receive Cal Grants for students again,” Smith said. “Gov. Brown helped pass the bill with the Obama Administration because they didn’t want students and vocational schools to have this type of funding if their default rates are high.”
Students who default on their loans may have children, low-incomes or housing issues.
“It depends on the situation,” Smith said. “If students don’t have all the capabilities of attending school, they have to drop out; most likely they don’t work at that time and forget about the loans.”
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