The State of California is taking a page from the playbook of the u.s. Department of education. In an attempt to cut an almost $ 27 billion budget deficit, lawmakers are exploring the possibility of payments of the State of Cal Grant college student financial aid program on the basis of a school student loan default rate limit.
CAL grants are State-funded grants students with rates from $ 576 to $ 11,124 per year, depending on their degree program, to help pay for the college. Under the measure currently being considered by the State legislature, would schools whose default rate on student loans above a certain threshold are excluded from the provision of Cal grants to their students. Square in the crosshairs of the legislative move would be for-profit colleges and universities in California, many of these default rates are currently the proposed threshold.
Under the schools involved would be five for-profit Giants: the University of Phoenix; DeVry University; ITT Technical Institute; Kaplan Colleges; and Corinthian Colleges, that Everest College, Heald College and WyoTech operates.
Combined, receive five schoolnet works more than 42 million dollars in grants in the academic year 2009-10. All five institutions currently have a standard rate exceeds that of the State Student standard rate Index, a new calculation designed to identify institutions whose students chronically default on their loans from the school.
For-profit schools took all a potential hit in February when the California Student Aid Commission unanimously to Cal Grant awards to for-profit colleges, the Cal Grant Program subject to budget cuts. The Commission called for-profit schools high default rates, poor supervision, and high dropout rates as justification for yanking Government funding for Cal grants in these schools. As part of its proposal, the Commission recommended maximum annual Cal Grant capping awards for students at for-profit institutions.
Currently students of a vocational training program to a college community California qualify for annual Cal Grant awards of $ 576. Students of a vocational training program on a career training school or other non-community college setting as a for-profit school-are eligible for up to an additional $ 2,592 per year.
Students enrolled in a degree program of two years or four years to a private college-which for-profit schools-are eligible for up to $ 9,708 per year.
Recommendation of the Committee would Cal grants for students looking for vocational training certificates or degrees two years on a for-profit college at the maximum price for the first-year students enrolled in the program of the degree of at least one yearlimit, currently $ 1551.
Students pursuing a Bachelor's degree in a for-profit institution would be limited to the maximum Cal Grant award available for students who have a two-year or four year degree within the system of the California State University, currently $ 4,884.
In its recommendations last month, the Commission had also proposed cutting Cal Grant awards at institutions with high student loan default rates-a version of the measure currently being conducted by the California legislature investigated. Under the bill in its proposed form, could a disqualified school this qualifies for Cal grants offer as the default rate were lowered to regain an acceptable level.
In the meantime, however, if the Bill passes, the loss of State aid force more California students at for-profit colleges to seek extra federal college loans and non-federal private student loans to make the expenditure that would have previously dealt with by a Cal Grant.
Legislators say that the rule change makes sense because for-profit colleges and universities use grants and other federal and State financial aid programs as an incentive to draw students, especially low-income students, without reducing what is often a high cost of participation.
Although Cal grants student support awards, that unlike College loans, need not be repaid, the cost to attend a private, for-profit school students often take on extra federal, State, and private student loans to pursue their education.
In many cases, the full on a for-profit college courses students don't transfer to a certified nonprofit organization University. Furthermore, graduates often have a difficult time finding meaningful employment after graduation, leading to a high standard rate on their often large school loan debt leads.
By students from using Cal subsidies to these high costs of for-profit schools that have left students with a high degree of guilt and ill-prepared for the workplace block, says the Commission California Student legal aid limited these schools capability with a low income students to recruit, which are most vulnerable to promises of subsidies and other student aid.
Representatives of the for-profit college industry lobbying against the proposal of California. If adopted, the legislation would the State save approximately $ 24 million, less than 1 percent of the $ 27 billion lawmakers need to cut to balance the State's books.
