BILL ANALYSIS Ó
AB 25
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ASSEMBLY THIRD READING
AB
25 (Gipson)
As Amended April 8, 2015
Majority vote
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|Committee |Votes |Ayes |Noes |
| | | | |
| | | | |
|----------------+------+----------------------+--------------------|
|Higher |11-0 |Medina, Baker, Bloom, | |
|Education | |Harper, Irwin, | |
| | |Levine, Linder, Low, | |
| | |Santiago, Weber, | |
| | |Williams | |
| | | | |
|----------------+------+----------------------+--------------------|
|Appropriations |17-0 |Gomez, Bigelow, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | |Gallagher, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | |Gordon, Holden, | |
| | |Jones, Quirk, Rendon, | |
| | |Wagner, Weber, Wood | |
| | | | |
| | | | |
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AB 25
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SUMMARY: Would require the California Student Aid Commission
(CSAC) to establish an appeal process for an otherwise qualifying
institution that fails to satisfy the three-year cohort default
rate and the graduation rate requirements, and would authorize
CSAC to grant an appeal for an academic year if the commission has
determined the institution has a cohort size of 20 individuals or
less and that the cohort is not representative of the overall
institutional performance.
EXISTING LAW: Requires institutions to meet specified criteria in
order to participate in the Cal Grant program, including, for
institutions with more than 40% of undergraduate students
borrowing federal student loans: 1) a three-year cohort default
rate (CDR) equal to or below 15.5%; and, 2) a graduation rate
above 20% for the 2015-16, 2016-17 and the 2017-18 academic years,
and above 30% for subsequent academic years. (Education Code (EDC)
Section 69432.7)
FISCAL
EFFECT: According to the Assembly Appropriations Committee, 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: Background. 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
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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. To
participate in the Cal Grant program in the 2011-12 academic year,
an institution was required to have a CDR of less than 24.6%. In
2011-12, 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%, as reported by the Integrated
Postsecondary Education Data System (IPEDS). IPEDS graduation
data calculates 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.
In the 2015-16 academic year, 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.
Charles R. Drew University of Medicine and Science (CDU). For the
2014-15 and 2015-16 academic years, CSAC deemed CDU ineligible for
participation in the Cal Grant program for failing to meet
graduation rate requirements. According to IPEDS data, CDU had a
graduation rate of 0.0% in these award years. However, as CDU
notes, IPEDS data is based on very small student cohorts. In the
2014-15 award year, CDU graduation rate data is based on eight
students that began in Fall 2005; none of whom graduated before
Spring 2011. In the 2015-16 award year, graduation rate data is
based on four students that began in the fall of 2006; none of
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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.
Existing CSAC appeal process. Institutions deemed ineligible to
participate in the Cal Grant program have appealed to CSAC. There
is currently no statutory authorization provided to CSAC regarding
institutional appeals. For the 2012-13 academic year,
approximately six institutions appealed based on the cohort
default rate/graduation rate disqualification. These appeals were
not brought before the commissioners as staff believed
commissioners had no authority to deviate from the statutory
requirements. Two subsequent lawsuits by institutions seeking to
use preliminary qualifying data resulted in the Academy of Art and
Argosy/Art Institute regaining eligibility.
In 2013, CSAC staff brought to commissioners an appeal filed by
Menlo College; commissioners granted the appeal finding that a
calculation error had been made by United States Department of
Education in publishing rates and a correct calculation resulted
in the institution meeting the CDR requirements. In 2014, CSAC
commissioners heard three appeals relating to the 2014-15 academic
year eligibility. Commissioners granted Marymount California's
appeal based on factors similar to Menlo College; CDU and National
Hispanic University were denied because CSAC determined it did not
have flexibility to consider factors beyond those CDR and
graduation rate thresholds established in law.
Analysis Prepared by:
Laura Metune / HIGHER ED. / (916) 319-3960 FN:
0000686
AB 25
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