California Legislature—2013–14 Regular Session

Assembly Bill No. 1538

Introduced by Assembly Member Eggman

(Coauthors: Senators Galgiani and Hill)

January 22, 2014

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

LEGISLATIVE COUNSEL’S DIGEST

AB 1538, as introduced, Eggman. 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 (commission), and establishes eligibility requirements for awards under these programs for participating students attending qualifying institutions, as defined.

Existing law requires the Student Aid Commission to certify by October 1 of each year a qualifying institution’s latest 3-year cohort default rate as most recently reported by the United States Department of Education. Existing law provides that, for purposes of the 2012-13 academic year, and every academic year thereafter, an otherwise qualifying institution with a 3-year cohort default rate that is equal to or greater than 15.5% is ineligible for initial and renewal Cal Grant awards at the institution. Existing law also requires that an otherwise qualifying institution is ineligible for an initial or renewal Cal Grant award at the institution if the institution has a graduation rate of 30% or less for students taking 150% or less of the expected time to complete degree requirements, as specified, with certain exceptions.

If an otherwise qualifying institution has a default rate that exceeds the statutory threshold for eligibility, this bill would deem the institution eligible if the commission certifies that the institution satisfies specified conditions.

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

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

SECTION 1.  

Section 69432.7 of the Education Code is
amended to read:

69432.7.  

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

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

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

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

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

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

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

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

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

(g) “Expected family contribution,” with respect to an applicant,
shall be determined using the federal methodology pursuant to
subdivision (a) of Section 69506 (as established by Title IV of the
federal Higher Education Act of 1965, as amended (20 U.S.C. Sec.
1070 et seq.)) and applicable rules and regulations adopted by the
commission.

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

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

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

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

 

CAL GRANT PROGRAM INCOME CEILINGS

 

 

	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

 

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

 

CAL GRANT PROGRAM ASSET CEILINGS

 

 

	Cal Grant A, C, and T	Cal Grant B
Dependent**	$49,600	$49,600
Independent	$23,600	$23,600

 

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

 

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

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

(A) A California private or independent postsecondary
educational institution that participates in the Pell Grant Program
and in at least two of the following federal campus-based student
aid programs:

(i) Federal Work-Study.

(ii) Perkins Loan Program.

(iii) Supplemental Educational Opportunity Grant Program.

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

(C) A California public postsecondary educational institution.

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

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

(3) (A) The commission shall certify by October 1 of each year
the institution’s latest three-year cohort default rate and graduation
rate as most recently reported by the United States Department of
Education.

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

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

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

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

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

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

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

(II) The reductions specified in this subparagraph shall not
impact access costs as specified in subdivision (b) of Section
69435.

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

(G) For purposes of the 2012-13 academic year, and every
academic year thereafter, an otherwise qualifying institution with
a graduation rate of 30 percent or less for students taking 150
percent or less of the expected time to complete degree
requirements, as reported by the United States Department of
Education and as certified by the commission pursuant to
subparagraph (A), shall be ineligible for initial and renewal Cal
Grant awards at the institution, except as provided for in
subparagraphs begin delete (F) and (I) end delete begin insert (F), (H), and (J) end insert .

begin insert

(H) An institution that is ineligible for initial and renewal Cal
Grant awards at the institution under subparagraph (C) shall be
eligible if that institution satisfies all of the following conditions:

end insert begin insert

(i) The institution has an undergraduate student body comprising
of at least 2⁄3 low-income students as certified by the commission
by October 1 of the prior academic year. For purposes of this
subdivision, “low-income students” are students eligible for federal
Pell Grants.

end insert begin insert

(ii) The institution has a three-year cohort default rate less than
20 percent as certified by the commission under subparagraph
(A).

end insert begin insert

(iii) The institution has a graduation rate greater than 70
percent for students taking 150 percent or less of the expected time
to complete degree requirements as certified by the commission
under subparagraph (A).

end insert begin delete

(H)

end delete

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

begin delete

(I)

end delete

begin insert (J) end insert  Notwithstanding subparagraph (G), an otherwise qualifying
institution with a three-year cohort default rate that is less than 10
percent and a graduation rate above 20 percent for students taking
150 percent or less of the expected time to complete degree
requirements, as certified by the commission pursuant to
subparagraph (A), shall remain eligible for initial and renewal Cal
Grant awards at the institution through the 2016-17 academic year.

begin delete

(J)

end delete

begin insert (K) end insert  The commission shall do all of the following:

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

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

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

begin delete

(K)

end delete

begin insert (L) end insert  By January 1, 2013, the Legislative Analyst shall submit to
the Legislature a report on the implementation of this paragraph.
The report shall be prepared in consultation with the commission,
and shall include policy recommendations for appropriate measures
of default risk and other direct or indirect measures of quality or
effectiveness in educational institutions participating in the Cal
Grant Program, and appropriate scores for those measures. It is
the intent of the Legislature that appropriate policy and fiscal
committees review the requirements of this paragraph and consider
changes thereto.

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