Increasing financial aid so California students can graduate public colleges and universities without debt could cost the state up to $3.3 billion annually, according to a new report from the 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.
Tuesday’s report from the LAO, a non-partisan, independent agency that advises the Legislature, indicated that most of the financial aid currently available for California students targets tuition and other mandatory fees. But living expenses, including housing, food and transportation, are the costs that often force students to take on loans.
“There is tremendous interest by the Legislature and a call from students and families to make college more affordable, so these discussions are productive and may move [the cause] forward incrementally,” said Audrey Dow, senior vice president for the Campaign for College Opportunity.
According to LAO estimates, California’s community colleges, which enroll about 2.4 million students, would require an additional $2.2 billion annually in extra aid to cover all tuition and living expenses for all students in need. These are students who still have to take out loans on top of all financial aid, parental support and income from a job to cover all education costs.
California State University, with 460,000 students, would require an additional $800 million annually to cover tuition and living expenses of all its students in need, while University of California, with 210,000 students, would require an extra $300 million annually in aid.
On average, 53 percent of students at UC and CSU graduate with $19,500 in debt, while 2 percent of students at community colleges accrue $5,000 in debt, according to the report.
A study released in October found that California students graduate with some of the lowest debt loads in the nation, with only students in two states incurring less debt. The national average for student debt was $30,100, according to the study.
Still, the state Legislature directed the LAO as part of the 2016-17 Budget Act to provide it with options for creating a new state financial aid program intended to eliminate the need for students to take on any college debt.
The request came as many lawmakers, presidential candidates and advocacy groups nationally called for an overhaul of funding for colleges and universities so they could offer free or reduced tuition in the face of skyrocketing student debt.
Gov. Jerry Brown’s initial 2017-18 budget proposal, which anticipates state revenues to shrink in coming years, called for financial aid funding to remain relatively flat. His budget proposal released earlier this month also called for the phasing out of the Middle Class Scholarship, which provides financial aid to students in families with annual incomes generally between $80,000 and $156,000.
Additionally, both UC and CSU are planning tuition increases for this fall – $336 annually at UC and $270 annually at CSU.
The governor’s office on Tuesday declined to comment, saying it’s still reviewing the LAO’s findings.
In the current economic picture, it’s unlikely that the state would provide any significant increase in financial aid, said college and university leaders and advocacy groups.
“Given the governor’s proposed budget, the proposed tuition increases at UC and CSU, and the uncertainty of federal revenues flowing to California, a $3.3 billion annual program to eliminate college debt may be unrealistic,” said Audrey Dow, senior vice president for the Campaign for College Opportunity, a nonprofit that advocates for improved access and higher completion rates at public colleges and universities.
“However, there is tremendous interest by the Legislature and a call from students and families to make college more affordable, so these discussions are productive and may move [the cause] forward incrementally,” she said.
The LAO did offer recommendations for how colleges and universities could help students take on less debt without a large increase in state aid. They include encouraging more students to complete degrees in less time by having them take higher course loads and consolidating existing financial aid programs into one grant, which would reduce the slew of rules and requirements that often leave many parents confused.
California Community Colleges Chancellor Eloy Ortiz Oakley said the LAO report highlights how college affordability remains a top priority in California.
“We support frameworks of lower debt and the need to get students to complete a credential in a more timely manner,” he said. “We also need to repackage financial aid to make it less complex and to encourage more Californians to attend college full time.”