Student loans: UC keeps trying to make them useless
By officially prioritizing part-time work as a way for students to pay for their college education, the University of California has moved closer to its goal of freeing students from expensive loans by 2030.
The University of California is committed to providing its California undergraduates with a debt-free college experience by 2030 as part of an overhaul of how the system views college affordability.
To get there, the system of 230,000 students seeking a bachelor’s degree relies on a mix of state and federal support, revenue from recent tuition increases, and students working part-time to cover the full cost. of an education. Students from more affluent households would also rely on parental support.
The system’s governing body, the Board of Regents, took another step towards that debt-free goal on Thursday by voting to prioritize part-time work over taking out loans under the policy of official financial aid from UC. The change is subtle but is yet another example of UC signaling that its students should be able to earn a bachelor’s degree without needing to borrow in the next few years.
“The preferred outcome of our financial aid strategy is that students can pay for their education through the part-time work opportunities available to them and minimize student loans,” said Michael Brown, provost of the entire system. UC, during Wednesday’s meeting of UC Regents. .
Although more than half of UC undergraduates do not pay tuition due to financial aid, the free college movement has expanded its reach to include non-academic expenses that are still vital to a student’s education, such as housing, transportation, and food.
All of these expenses add up. Just over half of resident students graduate from UC with student loans, racking up an average of $18,800 in debt. This is a figure well below the national average, but still a financial cornerstone around the necks of borrowers. An analysis by CalMatters noted that low-income students who receive federal aid also take loans, for amounts typically ranging from $11,000 to $16,000.
The new information provides new insight into intergenerational debt. Experts say federal loans taken out by low-income parents can be a net negative for the family.
Earlier in the year, UC said it would provide additional aid to 6,000 low-income students this fall so students can avoid loans.
The goal of zero debt by 2030 largely depends on compliance by California lawmakers and the federal government.
The state Legislature and Governor Gavin Newsom are expected to commit $632 million this year as part of a down payment on a debt-free grant that experts say will ultimately cost $2.6 billion. Once fully funded, the scholarship is meant to give students enough money to cover full tuition after taking into account parental support, part-time work, and financial aid.
Low-income students whose families cannot afford to help out in college will need to contribute about $8,000 a year towards their education, which they can earn by working 15 hours a week during the school year. Where they find those jobs is an open question, but lawmakers and the governor launched a $500 million fund last year to create part-time work opportunities for low-income students attending public colleges and universities. of State.
Students from higher-income households will also be able to avoid taking out loans, but that assumes their families will provide money for their education based on a federal formula. High-income students would also be expected to work.
There is no timeline to fully fund the debt-free grant. However, the Senate wants to commit more money up front and fully fund the program by 2025-26 as part of the budget agreement scheduled for June 15.
The new Debt-Free Grant, which lawmakers are calling Middle Class Scholarship 2.0, is key to UC’s debt-free goals.
That 2030 debt-free goal “depends on the middle-class scholarship reform the Legislature passed last year and fully funding it,” said Seija Virtanen, associate director of budget relations for the State for UC, during a House Budget Subcommittee on Education. hearing this week.
For its part, UC will divert 45% of its revenue from its recent tuition hikes to student financial aid, up from 33%. The policy emerged last year. It’s also in UC’s pact with the governor, a de facto deal in which Newsom promises 5% annual increases in education funding for UC in return for key promises on affordability and student success. These funding increases still need to be approved by the legislator.
In an analysis conducted by UC officials last August and shared with CalMatters this week, the system plans to raise an additional $333 million by 2029-30 for its undergraduate scholarship aid program through the increase in tuition fees. The current level of aid is $785 million, Ryan King, a UC spokesperson, wrote in an email.
Already, UC financial aid is the second largest source of financial support for undergraduate students in the system. The federal government provided $420 million for student grants last year. California programs, led by the Cal Grant, which covers tuition, paid out nearly $1 billion in grants to students last year.
This state share will increase once the middle class scholarship is officially funded. But there is another wild card that may steer more student aid.
Last year, Governor Newsom vetoed a bill to add more than 100,000 students, including several thousand UC students, to the Cal Grant program, despite expanding the eligibility for grants by other means. A nearly identical bill is currently pending in the Legislative Assembly, but some lawmakers supporting the bill have been baffled that Newsom’s May budget proposal did not promise funding for the project. bill, which is expected to cost more than $300 million a year.
A prominent lawmaker who helps shape higher education spending policy called the omission a “significant irony.” Assemblyman Kevin McCarty, a Democrat from Sacramento who chairs the budget subcommittee on education, told a hearing this week that although the governor’s office has reached a debt-free pact with the ‘UC, the governor’s budget doesn’t fund this thing that you need to get a college debt-free.
About 109,000 of the 150,000 students who would benefit from Cal Grant expansion are community college students. (About 500,000 students from all institutions already get the Cal grant.) Unlike UC and Cal State students, those attending community colleges are not eligible for the planned expansion of scholarships. middle-class studies, though they get it if they transfer to a California audience. university.
That’s why Eloy Ortiz Oakley, who serves as both regent of UC and chancellor of California’s community colleges, calls passage of the Cal Grant expansion bill the top priority of the community college system. The bill would give these students at least $1,648 a year while at community college and give them free tuition if they transfer to a UC or California state.
“Students who have been last in line for so long have to be coming to the front of the line here very soon,” Oakley said in an interview.
But more money for financial aid is only half the conversation, he added. The UC must also find a way to reduce its costs. This may mean offering more online courses and avoiding filling certain vacancies, among other solutions.
“Are we hiring in places that continue to grow the bureaucracy of our colleges and universities? Or are we growing into places that directly serve the needs of students? ” He asked.