Credit: Larry Gordon/EdSource Today

The state Assembly’s Democratic leaders on Monday unveiled a proposal to offer free tuition to all first-year students at community colleges and to vastly expand grants that would help pay living costs for California State University and University of California students and reduce loans.

The proposal is aimed at reducing student debt, but could cost California taxpayers as much as $1.6 billion a year. Among its features, it would maintain a program that provides grants for middle class families with incomes between $80,000 and $150,000 a year. Gov. Jerry Brown wants to eliminate those grants.

Other parts could face opposition from Brown as well. A spokesman for the governor on Monday questioned how the Assembly plan could be financed given possible budget shortfalls.

The Assembly plan’s most expensive feature, called the “Degrees Not Debt Scholarships,” would offer supplemental grants ranging from about $2,660 to nearly $17,955 for about 400,000 CSU and UC students who already qualify for Cal Grants, university aid or Middle Class Scholarships. The grants, to be phased in over five years starting in 2018-19, are aimed at easing costs for housing, books and transportation for students with family incomes up to $145,000 a year.

“Too often college is out of reach and unattainable for middle class and lower-income families,” said Assemblyman Kevin McCarty (D-Sacramento), who chairs the Assembly Budget Subcommittee on Education Finance. And for those who can enroll, too many “graduate with a mountain of debt,” he added. McCarty noted that the proposal uses a sliding scale based on family income and requires contributions from families earning more than $60,000 a year and from all students, presumably from part-time jobs during the school year and summer work.

McCarty said that he expects state revenues to increase enough in the next few years to make this affordable without requiring cuts to other spending. It would be phased in as funds are available, he said. “Of course we have to be responsible,” he said.

H.D. Palmer, spokesman for the Brown administration’s Finance Department, said more analysis was needed before the governor would take a definitive position on the Assembly plan. But Palmer stressed that the governor’s budget already faces pressures from anticipated revenue shortfalls without taking on such additional new programs. “This proposal has a noble goal, but the question is how would you pay for it? If not higher taxes, would they then take a like amount from K-12 education, health and human services or transportation?” he asked.

Palmer noted that the state has increased funding for UC, CSU and community colleges in the past five years to keep tuition flat and to help students graduate faster with more course offerings. (UC is raising tuition for next year, and CSU is expected to follow as well.)

At a presentation Monday in Sacramento, Assemblyman Phil Ting (D-San Francisco), who is chair of the Assembly Budget Committee, told reporters that the governor’s budget concerns would not cause him to withdraw support from the scholarship proposals. “We don’t see our job as currying favor with the governor. We see our job as protecting Californians,” he said.

The proposal has echoes of other plans across the country and dovetails with themes raised by past Democratic presidential candidate Bernie Sanders, the Democratic senator from Vermont.

Its backers concede that the California proposal would not eliminate all student borrowing because some families may not be able to come up with their expected family contributions and some students may not be able to work enough for their share. But they say that loans would substantially decrease with the Degrees Not Debt grants.

Graduates of California colleges and universities finish school with some of the lowest average debt loads in the nation, mainly because of relatively low tuition at CSU and community colleges, according to a study last fall by the Oakland-based Institute for College Access & Success (TICAS). On average, about 54 percent of students who started at a four-year California college and graduated in 2015 had incurred debt; the average loan total was $22,191 for those who borrowed. The national average was $30,100, and only Utah ($18,873) and New Mexico ($20,193) had lower statewide totals than California, the report said.

On Monday, TICAS criticized the Assembly plan for providing larger supplemental grants to families with incomes more than $95,000 than to those with less than $60,000. It also said that it was a mistake not to significantly bolster grants to pay for community college students’ living costs. “California has major problems with college affordability and completion, but neither will be solved by the ‘Degrees Not Debt Scholarship’ proposal,” said the TICAS statement.

According to an analysis released by Assembly leaders, the new proposed grants for UC and CSU students would go to 204,000 Cal Grant recipients, 134,000 university grant recipients and 54,000 Middle Class Scholarship grants.

Those Degrees Not Debt Scholarships would not be available for community college students because they do not generally incur much debt, officials said. But the plan calls for more than doubling the current “Student Success” grants, which help low-income community college students buy books and supplies, to $1,380 annually.

The plan also would cover tuition for one year for any full-time, in-state student at California community colleges, similar to some local plans in Los Angeles, Long Beach and elsewhere. Many low-income community college students already receive complete waivers on fees for more than one year. The Assembly proposal would add about 79,000 recipients, analysts said.

In another source of potential conflict with the governor, Assembly leaders want to maintain the three-year-old Middle Class Scholarships, which are awarded to about 46,000 students. The top award is about $3,700 for UC students. Brown says the $116 million in savings if the program phases out over the next four years will help support the rest of the Cal Grant program for low-income families.

Including living costs, the Assembly plan estimates that CSU students face expenses totaling about $23,000 a year, and at UC about $33,000. So using the same financial aid application for Cal Grants, federal scholarships, loans and campus grants, the proposal seeks to fill in holes left after other awards.

Reducing student debt can have important consequences, Assembly Speaker Anthony Rendon, D-Paramount, said. “Making college debt-free will encourage more students to go to college and leave with degrees, not debt,” he said.

Increasing financial aid so California students can graduate public colleges and universities without any debt could cost the state up to $3.3 billion annually, according to a January report from the state Legislative Analyst’s Office.

The report, “Creating a Debt Free College Program,” found that even with the additional funding, students would still need to rely on existing state and federal aid, financial support from parents, and students’ income from full- or part-time jobs in order to graduate without costly loans.

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