Amended in Assembly March 24, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 1590


Introduced by Assembly Member Wieckowski

February 3, 2014


An act to amend Section 69432.7 of the Education Code, relating to student financial aid.

LEGISLATIVE COUNSEL’S DIGEST

AB 1590, as amended, Wieckowski. Student financial aid: Cal Grant Program.

Existing law, the Ortiz-Pacheco-Poochigian-Vasconcellos Cal Grant Program (Cal Grant Program), establishes the Cal Grant A and B Entitlement Awards, the California Community College Transfer Entitlement Awards, the Competitive Cal Grant A and B Awards, the Cal Grant C Awards, and the Cal Grant T Awards under the administration of the Student Aid Commission, and establishes eligibility requirements for awards under these programs for participating students attending qualifying institutions, as defined.begin insert The existing definition of a qualifying institution includes, among other institutions, California private or independent postsecondary educational institutions that participate in the Pell Grant Program and in at least 2 of the following federal campus-based programs: federal Work-Study, the Perkins Loan Program, and the Supplemental Education Opportunity Grant Program.end insert

Existing law requires the commission to certify by October 1 of each year a qualifying institution’s latest 3-year cohort default rate and graduation rate as most recently reported by the United States Department of Education.

This bill would express findings and declarations, wouldbegin insert delete “campus-based” from the description of the federal programs referenced above in connection with the California private or postsecondary educational institutions that are defined as qualifying institutions, and would replace the Perkins Loan Program with the Stafford Loan Program for purposes of qualifying a private or independent postsecondary institution for Cal grants. The bill wouldend insert change the date the commission needs to certify the institution’s latest 3-year cohort default rate and graduation rate to November 1begin delete,end delete and would define the graduation rate of a qualifying institution to be the percentage of full-time, first-time degree or certificate-seeking undergraduate students who graduate in 150% or less of the expected time to complete the degree requirements as most recently reported by the United States Department of Education.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

The Legislature finds and declares all of the
2following:

3(a) The Budget Act of 2011 and the Budget Act of 2012 made
4significant statutory changes to the Cal Grant Program, refining
5institutional eligibility based on cohort default rates and graduation
6rates, which measure institutional quality.

7(b) College institutions with a substantial proportion of students
8taking out federal student loans and with a high percentage of those
9borrowers defaulting on the student loans no longer qualify to
10participate in the Cal Grant Program. The Budget Act of 2012
11further tightened the loan default limitbegin insert,end insert and added a minimum
12graduation rate that institutions must satisfy to remain eligible to
13participate in the Cal Grant Program.

14(c) Due to a lack of clarity, there is confusion about the
15implementation by the Student Aid Commission of these statutory
16changes.

17(d) On January 7, 2013, the Legislative Analyst’s Office issued
18a report entitled, “An Analysis of New Cal Grant Eligibility Rules,”
19which analyzed the new eligibility rules and offered several
20findings and recommendations for clarifying existing statute.

P3    1(e) Clarifying these provisions going forward will avoid further
2confusion and ensure consistency in the administration of the Cal
3Grant Program.

4

SEC. 2.  

Section 69432.7 of the Education Code is amended to
5read:

6

69432.7.  

As used in this chapter, the following terms have the
7following meanings:

8(a) An “academic year” is July 1 to June 30, inclusive. The
9starting date of a session shall determine the academic year in
10which it is included.

11(b) “Access costs” means living expenses and expenses for
12transportation, supplies, and books.

13(c) “Award year” means one academic year, or the equivalent,
14of attendance at a qualifying institution.

15(d) “College grade point average” and “community college
16grade point average” mean a grade point average calculated on the
17basis of all college work completed, except for nontransferable
18units and courses not counted in the computation for admission to
19a California public institution of higher education that grants a
20baccalaureate degree.

21(e) “Commission” means the Student Aid Commission.

22(f) “Enrollment status” means part- or full-time status.

23(1) “Part time,” for purposes of Cal Grant eligibility, means 6
24to 11 semester units, inclusive, or the equivalent.

25(2) “Full time,” for purposes of Cal Grant eligibility, means 12
26or more semester units or the equivalent.

27(g) “Expected family contribution,” with respect to an applicant,
28shall be determined using the federal methodology pursuant to
29subdivision (a) of Section 69506 (as established by Title IV of the
30 federal Higher Education Act of 1965, as amended (20 U.S.C. Sec.
311070 et seq.)) and applicable rules and regulations adopted by the
32commission.

33(h) “High school grade point average” means a grade point
34average calculated on a 4.0 scale, using all academic coursework,
35for the sophomore year, the summer following the sophomore
36year, the junior year, and the summer following the junior year,
37excluding physical education, reserve officer training corps
38(ROTC), and remedial courses, and computed pursuant to
39regulations of the commission. However, for high school graduates
P4    1who apply after their senior year, “high school grade point average”
2includes senior year coursework.

3(i) “Instructional program of not less than one academic year”
4means a program of study that results in the award of an associate
5or baccalaureate degree or certificate requiring at least 24 semester
6units or the equivalent, or that results in eligibility for transfer from
7a community college to a baccalaureate degree program.

8(j) “Instructional program of not less than two academic years”
9means a program of study that results in the award of an associate
10or baccalaureate degree requiring at least 48 semester units or the
11equivalent, or that results in eligibility for transfer from a
12community college to a baccalaureate degree program.

13(k) “Maximum household income and asset levels” means the
14applicable household income and household asset levels for
15participants, including new applicants and renewing recipients, in
16the Cal Grant Program, as defined and adopted in regulations by
17the commission for the 2001-02 academic year, which shall be
18set pursuant to the following income and asset ceiling amounts:


19

 

CAL GRANT PROGRAM INCOME CEILINGS

P4   213839P4    6

 

 

Cal Grant A,
C, and T

Cal Grant B

Dependent and Independent students with dependents*

Family Size

  Six or more

$74,100  

$40,700  

  Five

$68,700  

$37,700  

  Four

$64,100  

$33,700  

  Three

$59,000  

$30,300  

  Two

$57,600  

$26,900  


Independent


  Single, no dependents

$23,500  

$23,500  

  Married

$26,900  

$26,900  

3839P4    6

 

36*Applies to independent students with dependents other than a
37spouse.

 

CAL GRANT PROGRAM ASSET CEILINGS

P4    6

 

 

Cal Grant A,
C, and T

Cal Grant B


Dependent**   


$49,600  


$49,600  

Independent   

$23,600  

$23,600  

 

7**Applies to independent students with dependents other than a
8spouse.

9

10The commission shall annually adjust the maximum household
11income and asset levels based on the percentage change in the cost
12of living within the meaning of paragraph (1) of subdivision (e)
13of Section 8 of Article XIII B of the California Constitution. The
14maximum household income and asset levels applicable to a
15renewing recipient shall be the greater of the adjusted maximum
16household income and asset levels or the maximum household
17 income and asset levels at the time of the renewing recipient’s
18initial Cal Grant award. For a recipient who was initially awarded
19a Cal Grant for an academic year before the 2011-12 academic
20year, the maximum household income and asset levels shall be the
21greater of the adjusted maximum household income and asset
22levels or the 2010-11 academic year maximum household income
23and asset levels. An applicant or renewal recipient who qualifies
24to be considered under the simplified needs test established by
25federal law for student assistance shall be presumed to meet the
26asset level test under this section. Prior to disbursing any Cal Grant
27funds, a qualifying institution shall be obligated, under the terms
28of its institutional participation agreement with the commission,
29to resolve any conflicts that may exist in the data the institution
30possesses relating to that individual.

31(l) (1) “Qualifying institution” means an institution that
32complies with paragraphs (2) and (3) and is any of the following:

33(A) A California private or independent postsecondary
34educational institution that participates in the Pell Grant Program
35and in at least two of the following federalbegin delete campus-basedend delete student
36aid programs:

37(i) Federal Work-Study.

38(ii) Stafford Loan Program.

39(iii) Supplemental Educational Opportunity Grant Program.

P6    1(B) A nonprofit institution headquartered and operating in
2California that certifies to the commission that 10 percent of the
3 institution’s operating budget, as demonstrated in an audited
4financial statement, is expended for purposes of institutionally
5funded student financial aid in the form of grants, that demonstrates
6to the commission that it has the administrative capacity to
7administer the funds, that is accredited by the Western Association
8of Schools and Colleges, and that meets any other state-required
9criteria adopted by regulation by the commission in consultation
10with the Department of Finance. A regionally accredited institution
11that was deemed qualified by the commission to participate in the
12Cal Grant Program for the 2000-01 academic year shall retain its
13eligibility as long as it maintains its existing accreditation status.

14(C) A California public postsecondary educational institution.

15(2) (A) The institution shall provide information on where to
16access California license examination passage rates for the most
17recent available year from graduates of its undergraduate programs
18leading to employment for which passage of a California licensing
19examination is required, if that data is electronically available
20through the Internet Web site of a California licensing or regulatory
21agency. For purposes of this paragraph, “provide” may exclusively
22include placement of an Internet Web site address labeled as an
23access point for the data on the passage rates of recent program
24graduates on the Internet Web site where enrollment information
25is also located, on an Internet Web site that provides centralized
26admissions information for postsecondary educational systems
27with multiple campuses, or on applications for enrollment or other
28program information distributed to prospective students.

29(B) The institution shall be responsible for certifying to the
30commission compliance with the requirements of subparagraph
31(A).

32(3) (A) The commission shall certify by November 1 of each
33year the institution’s latest official three-year cohort default rate
34and graduation rate as most recently reported by the United States
35Department of Education. For purposes of this section, the
36graduation rate is the percentage of full-time, first-time degree or
37certificate-seeking undergraduate students who graduate in 150
38percent or less of the expected time to complete degree
39requirements as most recently reported publicly in any format,
P7    1including preliminary data records, by the United States
2Department of Education.

3(B) For purposes of the 2011-12 academic year, an otherwise
4qualifying institution with a three-year cohort default rate reported
5by the United States Department of Education that is equal to or
6greater than 24.6 percent shall be ineligible for initial and renewal
7Cal Grant awards at the institution, except as provided in
8subparagraph (F).

9(C) For purposes of the 2012-13 academic year, and every
10academic year thereafter, an otherwise qualifying institution with
11a three-year cohort default rate that is equal to or greater than 15.5
12percent, as certified by the commission on October 1, 2011, and
13every year thereafter, shall be ineligible for initial and renewal Cal
14Grant awards at the institution, except as provided in subparagraph
15(F).

16(D) (i) An otherwise qualifying institution that becomes
17ineligible under this paragraph for initial and renewal Cal Grant
18awards shall regain its eligibility for the academic year for which
19it satisfies the requirements established in subparagraph (B), (C),
20or (G), as applicable.

21(ii) If the United States Department of Education corrects or
22revises an institution’s three-year cohort default rate or graduation
23rate that originally failed to satisfy the requirements established
24in subparagraph (B), (C), or (G), as applicable, and the correction
25or revision results in the institution’s three-year cohort default rate
26or graduation rate satisfying those requirements, that institution
27shall immediately regain its eligibility for the academic year to
28which the corrected or revised three-year cohort default rate or
29graduation rate would have been applied.

30(E) An otherwise qualifying institution for which no three-year
31cohort default rate or graduation rate has been reported by the
32United States Department of Education shall be provisionally
33eligible to participate in the Cal Grant Program until a three-year
34cohort default rate or graduation rate has been reported for the
35institution by the United States Department of Education.

36(F) (i) An institution that is ineligible for initial and renewal
37Cal Grant awards at the institution under subparagraph (B), (C),
38or (G) shall be eligible for renewal Cal Grant awards for recipients
39who were enrolled in the ineligible institution during the academic
40year before the academic year for which the institution is ineligible
P8    1and who choose to renew their Cal Grant awards to attend the
2ineligible institution. Cal Grant awards subject to this subparagraph
3shall be reduced as follows:

4(I) The maximum Cal Grant A and B Awards specified in the
5annual Budget Act shall be reduced by 20 percent.

6(II) The reductions specified in this subparagraph shall not
7impact access costs as specified in subdivision (b) of Section
869435.

9(ii) This subparagraph shall become inoperative on July 1, 2013.

10(G) For purposes of the 2012-13 academic year, and every
11academic year thereafter, an otherwise qualifying institution with
12a graduation rate of 30 percent or lessbegin insert,end insert as certified by the
13commission pursuant to subparagraph (A), shall be ineligible for
14initial and renewal Cal Grant awards at the institution, except as
15provided for in subparagraphs (F) and (I).

16(H) Notwithstanding any other law, the requirements of this
17paragraph shall not apply to institutions with 40 percent or less of
18undergraduate students borrowing federal student loans, using
19information reported to the United States Department of Education
20for the academic year two years before the academic year in which
21the commission is certifying the three-year cohort default rate or
22graduation rate pursuant to subparagraph (A).

23(I) Notwithstanding subparagraph (G), an otherwise qualifying
24institution that maintains a three-year cohort default rate that is
25less than 10 percent and a graduation rate above 20 percentbegin insert, end insert as
26certified by the commission pursuant to subparagraph (A), shall
27remain eligible for initial and renewal Cal Grant awards at the
28institution through the 2016-17 academic year.

29(J) The commission shall do all of the following:

30(i) Notify initial Cal Grant recipients seeking to attend, or
31attending, an institution that is ineligible for initial and renewal
32Cal Grant awards under subparagraph (C) or (G) that the institution
33is ineligible for initial Cal Grant awards for the academic year for
34which the student received an initial Cal Grant award.

35(ii) Notify renewal Cal Grant recipients attending an institution
36that is ineligible for initial and renewal Cal Grant awards at the
37institution under subparagraph (C) or (G) that the student’s Cal
38Grant award will be reduced by 20 percent, or eliminated, as
39appropriate, if the student attends the ineligible institution in an
40academic year in which the institution is ineligible.

P9    1(iii) Provide initial and renewal Cal Grant recipients seeking to
2attend, or attending, an institution that is ineligible for initial and
3renewal Cal Grant awards at the institution under subparagraph
4(C) or (G) with a complete list of all California postsecondary
5educational institutions at which the student would be eligible to
6receive an unreduced Cal Grant award.

7(m) “Satisfactory academic progress” means those criteria
8required by applicable federal standards published in Title 34 of
9the Code of Federal Regulations. The commission may adopt
10regulations defining “satisfactory academic progress” in a manner
11that is consistent with those federal standards.



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