BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 1590
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 1590 (Wieckowski)
          As Amended  August 13, 2014
          Majority vote
           
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          |ASSEMBLY:  |75-0 |(April 24,      |SENATE: |36-0 |(August 18,    |
          |           |     |2014)           |        |     |2014)          |
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          Original Committee Reference:    HIGHER ED.  

           SUMMARY  :  Requires the California Student Aid Commission (CSAC),  
          in administering the Cal Grant Program, to certify cohort  
          default rate and graduation rate data for institutions seeking  
          to participate by November 1 and to use the most recent  
          publically available data.  Revises the federal loan program  
          participation requirements for private Cal Grant qualifying  
          institutions.  

           The Senate amendments  are technical and clarifying in nature,  
          and reflect changes made to this code section in the 2014-15  
          Budget Act.
           
          EXISTING LAW  requires, as a condition of participation in the  
          Cal Grant Program, an institution with more than 40% of  
          undergraduate students borrowing federal student loans to  
          maintain either 1) a three-year cohort default rate of less than  
          15.5% and a graduation rate of greater than 30% (within 150% of  
          program length) or 2) a three-year cohort default rate of less  
          than 10% and a graduation rate of greater than 20% (within 150%  
          of program length).
           
           FISCAL EFFECT  :  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.

           COMMENTS  :  In an effort to increase accountability over public  
          financial aid expenditures and address the budget deficit, as a  
          part of the 2011-12 Budget Act, California established  
          requirements linking an institution's participation in the Cal  
          Grant Program to the percentage of students borrowing federal  
          loans and the number of students defaulting on those federal  
          loans within three years of entering repayment.  In the 2012-13  
          Budget Act, the requirements regarding loan defaults were  
          tightened and a graduation rate requirement was established.  In  








                                                                  AB 1590
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          the 2014-15 academic year, 122 institutions (primarily  
          for-profit colleges) are ineligible to participate.  Cal Grant  
          students attending or seeking to attend ineligible institutions  
          are required to transfer to an eligible institution in order to  
          receive their Cal Grant award. 

          In January 2013, the Legislative Analyst's Office (LAO) reported  
          to the Legislature on CSAC implementation of the Cal Grant  
          requirements and provided recommendations for refining the  
          standards.  Among its recommendations, LAO suggested changing  
          the date by which CSAC is required to certify default rate and  
          graduation data and requiring CSAC to utilize the most recently  
          available data.  This bill would move the certification date  
          from October 1 to November 1 to coincide with United States  
          Department of Education (USDE) schedule for posting graduation  
          rates, and require CSAC to use the most recent available data  
          published by USDE.  

          Existing law requires private Cal Grant qualifying institutions  
          to participate in at least two of three outlined federal  
          campus-based student aid programs (Federal Work-Study, Perkins  
          Loan Program, or Supplemental Educational Opportunity Grant  
          Program).   This bill removes the Perkins Loan Program and  
          replaces it with the Stafford Loan (Direct Loan) Program.  The  
          Author notes that the Perkins Loan Program is limited to those  
          schools who already participate, no new institutions may enroll.  
           The federally backed Stafford Loan Program is offered at more  
          institutions, and available to more students.  For 2012-13,  
          nearly 500 California institutions participated in Stafford Loan  
          Programs, while only 121 California institutions participated in  
          Perkins Loan Programs.   

           
          Analysis Prepared by  :    Laura Metune / HIGHER ED. / (916)  
          319-3960 


                                                               FN: 0004716 




          










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