BILL ANALYSIS Ó
AB 25
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Date of Hearing: April 15, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
25 (Gipson) - As Amended April 8, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill authorizes the California Student Aid Commission
(CSAC) to grant an appeal, for one academic year, to
institutions failing to meet Cal Grant program participation
criteria if the commission determines that the cohort of
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students used to determine the ineligibility for participation
comprised 20 individuals or less and that cohort is not
representative of overall institutional performance.
FISCAL EFFECT:
1)Given the small number of schools that would likely appeal in
any given year, CSAC's administrative costs will be minor and
absorbable.
2)To the extent institutions determined ineligible for Cal Grant
participation are able to regain eligibility through the
appeals process, Cal Grant costs would increase for the
academic year of reinstatement, assuming students at these
institutions who had received Cal Grant awards would not
otherwise have re-enrolled at another Cal Grant eligible
institution. For example, students at the four small-cohort
schools most recently deemed ineligible for Cal Grant
participation received Cal Grant awards totaling about
$200,000 in the prior academic year. The actual annual costs
would likely be less than this amount, as not every school
would necessarily regain eligibility. Moreover, in prior
years, fewer small-cohort schools have been deemed in
eligible.
COMMENTS:
1)Background. 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
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entering repayment, i.e the cohort default rate (CDR). To
participate in the Cal Grant program in the 2011-12, an
institution was required to have a CDR of less than 24.6%. In
that year, 76 institutions failed to meet the CDR
requirements.
In the 2012-13 Budget Act, the requirements regarding loan
defaults were tightened to require a CDR of less than 15.5%,
and a graduation rate of greater than 30%, using federal data
calculated as the percentage of first-time, full-time students
who began in the fall term and graduate within 150% of the
published program length. (For example, the 2012 graduation
rate for bachelor's degree programs is based on the number of
students who began their pursuit as a full-time, first-time
student in the fall of 2006.)
For 2015-16, institutions are required to maintain a CDR of
less than 15.5% and a graduation rate of greater than 20%. As
reported by CSAC, 301 institutions have been deemed Cal Grant
eligible; an additional 23 institutions have been identified
as potentially eligible, pending receipt of additional data.
CSAC has published a list of 21 ineligible institutions; 17 of
these institutions are for-profit, four are non-profit.
2)Purpose. According to the author, the Cal Grant program
requirements have exposed the vulnerability of smaller,
specialized non-profit universities that attract people coming
to study for a second career or who transfer to the campus
with some college experience. As an example, the Charles R.
Drew University of Medicine and Science (CDU) was deemed
ineligible for participation in the Cal Grant program for the
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2014-15 and 2015-16 academic years for failing to meet
graduation rate requirements. CDU had a graduation rate of 0%
in these award years. However, as CDU notes, the federal data
is based on very small student cohorts. For 2014-15, CDU
graduation rate data is based on eight students that began in
fall 2005; none of whom graduated before Spring 2011. For
2015-16, graduation rate data is based on only four students
that began in the fall of 2006; none of whom graduated before
Spring of 2012. According to CDU, the university is providing
institutional aid to students who lost their Cal Grant award
due to institutional ineligibility-approximately 24 students
in 2014-15.
Because such institutions enroll a lower number of first-time,
full-time students due to the nature of their program, their
Cal Grant eligibility status is more volatile. This bill
would require CSAC to establish an appeal process for
institutions that fail to meet eligibility requirements and
have a cohort size of 20 or fewer students.
3)Prior Legislation. Last year, AB 1538 (Eggman), which provided
an alternative pathway for Cal Grant qualification for
institutions serving low-income students that maintain a
three-year average CDR and graduation rate that meets
requirements, was held on this committee's Suspense file.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081
AB 25
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