BILL ANALYSIS �
AB 1590
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Date of Hearing: March 18, 2014
ASSEMBLY COMMITTEE ON HIGHER EDUCATION
Das Williams, Chair
AB 1590 (Wieckowski) - As Introduced: February 3, 2014
SUBJECT : Student financial aid: Cal Grant Program.
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.
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 : Unknown
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 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 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.
Dates and available data . In January 2013, the LAO reported to
the Legislature on CSAC implementation of the Cal Grant
requirements and provided recommendations for refining the
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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 U.S. Department of
Education (USDE) schedule for posting graduation rates, and
require CSAC to use the most recent available data published by
USDE.
Stafford vs. Perkins Loans . 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.
Clarifying amendments .
The author has agreed to accept the following technical
amendment to Education Code �69432.7(l)(1)(A) to reflect that
the Stafford Loan Program is not a "campus-based" federal
student aid program:
(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) Stafford Loan Program.
(iii) Supplemental Educational Opportunity Grant
Program.
REGISTERED SUPPORT / OPPOSITION :
Support
None on File
AB 1590
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Opposition
None on File
Analysis Prepared by : Laura Metune / HIGHER ED. / (916)
319-3960