Approximately 14,500 students have been or will soon be affected by the California Student Aid Commission’s announcement this week that 154 colleges are now ineligible for Cal Grants. The dramatic decision is partially prompted by California’s seemingly eternal budget crisis, in which a new city seems to declare bankruptcy every day. But it also equally derives from the shockingly high student loan default rates at many for-profit colleges. Whatever the reasons, the decision, has created thousands of individual budget crises for those students. They now have to scramble to find new sources of college funding less than a month before the start of the fall semester, transfer to a college that is still eligible if they want to keep their grants, or, if they are partly through their programs at ineligible institutions, stay there but accept a 20% grant reduction.
According to the Commission, the 154 institutions lost Cal Grant eligibility because they failed to meet the state’s minimum 15.5% or less loan default rate and/or required minimum 30% graduation rate. The Commission’s press release explained the decision this way:
“California is the first state in the nation to set higher institutional standards than the benchmarks established by the federal government for its grants and loans,” said Barry Keene, chair of the California Student Aid Commission. “The Commission has argued for years that the best way to protect students, parents and taxpayers is to make sure Cal Grants help students get into solid programs that deliver proven educational and career value. Eliminating schools with high loan default rates and low graduation rates is a sensible way to do that.”
This measure will particularly affect students at for-profit colleges, which make up 137 of the 154 schools that lost eligibility, including Kaplan College, ITT Technical College, and the University of Phoenix, the nation’s largest for-profit university. As the Commission explained,
“At a time when California is prioritizing how limited taxpayer funds are spent, the Legislature and the Governor established the new standards to direct Cal Grants away from programs that leave students with massive amounts of student debt and little hope of graduating or finding employment. Historically, students at for-profit schools have had much greater difficulty making it through an academic program to receive a degree. The average graduation rate for the nearly 348,000 students enrolled at the ten largest for-profit schools in the US is 20%, while the national average for all schools is 55.5%.”
The state’s decision may be a “sensible” one, but it may not have been sensible to enact this change less than a month before the fall semester starts. Students now have little time to make big changes. At a time when students should be buying their textbooks, they may now have to research the availability of their program of study at different schools, start the application and enrollment process, transfer their credits, and research financial aid options if the cost of their new school is higher than their previous and now ineligible school.
This process will be made even more difficult by the stark reality of how the budget crisis has affected the entire public university system in California. In the press release, the Commission’s Executive Director Diana Fuentes-Michel said, “Students should be aware that all California Community Colleges, CSUs and UCs, as well as most private, nonprofit schools such as Stanford and USC, remain eligible to participate in the Cal Grant program.” However, in March, the California State University system announced its plans to handle budget cuts by stopping new enrollments in Spring 2013. Also, the state’s community colleges have cut back by reducing the number of courses offered, increasing class sizes, and reducing instructional staff. In light of these reductions in service, Fuentes-Michel’s suggestion that students look to the state system for alternative higher education choices seems uninformed, cavalier, and even a bit callous, because the majority of students won’t be able to transfer to any of the school systems she mentioned.
What Should You Do?
If you are a student at one of the colleges and universities that lost Cal Grant funding, you have some choices. You can take a break for a semester or year until you’ve figured out your next step or earned some money to cover the grant loss. But this may be a bad choice if you are interested in completing your degree in a timely manner. Here are seven steps you can take to ensure that there is no break in your education:
- Check your college’s standing. Examine the list of eligible and ineligible schools provided by the California Student Aid Commission available here. Some for-profit colleges, such as Argosy University, are still eligible for Cal Grants, while some nonprofit schools, including St. Francis Career College, are now ineligible.
- Contact the California Student Aid Commission to discuss your options. Visit their website or call 1-888-224-7268.
- Contact your college’s financial aid department. Your school may already have put contingency plans in place to cover aid shortfalls, such as alternative aid programs or short-term loans.
- Consider transferring to another institution. Even if you have to go part-time due to limited course offerings, that’s preferable to sitting out a semester and delaying your graduation date target more than necessary.
- Consider online programs offered by accredited state universities. Many California state colleges and universities now offer courses and even whole programs online, and you can use your Cal Grant at a state university.
- Research last minute financial aid options. Even though financial aid award statements were sent out months ago, US News offers this list of suggestions to help you search for last minute sources of financial aid.
- Cut costs where you can. A no-brainer, but a truly difficult task if you’re already living on ramen noodles with four roommates or are a non-traditional student with a family. But consider ways you can cut personal costs: car pool or use public transportation instead of gassing up your car, bring bag lunches, scale back entertainment costs (you should be hitting the books anyway!)
The loss of the Cal Grants can be a devastating blow to students already struggling to pay for college. Students in other areas of the country should take note of this, because many states may borrow a page from the California Student Aid Commission and take similar action against underperforming colleges in their own states.
Do you have any suggestions to add to this list? Or a Cal Grant story to tell? Please share them here!