Assembly Budget Subcommittee No. 3 on Education Finance

Good morning, everyone. Welcome to our Assembly Budget Subcommitee number three on Education Finance. I am Chair Alvarez and I want to welcome you all for to be for being here today. Thank you so much.

Today, we will consider financial aid as the agenda clearly lays out, which has been a key and central focus of access to education, specifically for the Assembly in the last few years. The Governor has a proposal related to the Middle-Class Scholarships, which we will hear first.

Then, we will reflect on the impact of federal reductions on financial aid which have her—have been heard— in Subcommittee #1, as it relates to workforce shortage in the health care space. But certainly, there are impacts beyond healthcare, which you will hear about.

Then, we'll move on to how each segment is looking at financial aid for next academic year, in light of tuition increases that have been slated to go into an effect.

And we will also revisit the FAFSA processing data to see if we made progress in getting students to apply for aid, an issue that has been a focus for us, again, also in the couple last couple of years. And then at the end, we will also hear public comment on the issue of the state library.

We will not have a presentation, but we will absolutely take public comment on that front, in addition to other public comment as well. So, today's hearing continues our focus on making higher education affordable and accessible to all Californians, a priority of this Committee, a priority of this Assembly.

This is especially important in the face of economic challenges and other challenges that exist, as it relates to higher education. So, I'd like to first bring up the first panel, which is the Middle-Class Scholarship Update Proposal. We will start with this Governor's proposal.

We will explore how the program has affected affordability for California families and whether current or proposed levels of support are meeting the goals of our state and of our students. So, I'd ask the panel for issue number one to please come forward.

We will hear from the Department of Finance, from the Legislative Analyst Office, from the California Student Aid Commission, and then, the Office of the President from UC and the Office of the Chancellor from the CSU. So, with that, we'll kick it off with the Department of Finance. Welcome.

Good morning, Chair and Members. Hugo Solis Galeana with the Department of Finance. The Governor's budget proposes fully funding CAL Grant at its estimated level. For the '25-'26 academic year, that would be a total of $2,898,000,000, which is an increase of $107,000,000 from the 2025 Budget Act.

For the '26-'27 academic year, we're proposing funding CAL Grant at $3.235 billion, which is an increase of $444 million from the 2025 Budget Act.

This account—the growth that we're seeing in CAL Grant spending accounts for the growth in resident undergraduate student enrollment and increase in tuition at the UC and CSU systems and the requirement for all high school students to apply for the pre-application for Federal student aid, or the FAFSA.

For the Middle-Class Scholarship, the Governor's budget proposes raising the Middle-Class Scholarship appropriation by 136 million onetime General Fund in the fiscal year 2026-'27 and that will bring the total appropriation to $1,054,000,000, and this to maintain the award level at the 35% of unmet need that was approved as part of the 2025 Budget Act.

And this would be for the 2025-'26 academic year since the scholarship is funded in arrears. The Governor's budget also proposes funding the 2026-'27 middle class scholarship at the 17.5% level of a student's unmet need, which will cost 513 million General Fund and is the scholarship space funding level. Those are my remarks.

I'm happy to take questions at the appropriate time.

Thank you. LAO.

Good morning, Chair Alvarez and Members of the Subcommitee. Natalie Gonzalez with the Legislative Analyst office. As mentioned, under the reduced award coverage, the proposed funding level would be an estimated 513 million-ongoing General Fund. This decreases middle class scholarship spending by an estimated $541 million, resulting in a like amount of General Fund savings.

The Administration scores this 541 million as one time savings. As for the past few years the middle class scholarship program has been funded using both one time and ongoing General Fund. We recommend the Legislature consider adopting the Governor's proposal to reduce middle class scholarship award coverage.

Since the middle class scholarship program is now funded one year in arrears, the cost savings from reducing award amounts is in '26-'27 will not be felt until the '27-'28 budget year. Both our office and the Administration are projecting notable out year budget deficits including in 2027-'28.

As a result, the Legislature will have to consider cost containing solutions and currently, this is the only proposed higher education budget solution. We recommend considering this solution as it could be one of the less disruptive choices the Legislature faces when considering how to limit out-year spending.

We believe it could be less disruptive, given this program is less targeted to lower income students and has significant overlap with the CAL Grant Program.

Specifically, when the Middle Class Scholarship Program was created in 2013, it was created with the intention to provide partial tuition coverage to UC and CSU students who did not qualify for a Cal Grant, given they were higher income. That, under this program, about 50,000 students were served annually and it cost about $100 million annually.

Unlike the Cal Grant program, these students did not have to demonstrate financial need in order to receive a Middle Class Scholarship Award; they just had to be within the income cap. In '22-'23, the program was revamped from covering partial tuition to covering a percentage of a student's total remaining cost of attendance.

So, now, Middle-Class Scholarship Awards could be used for both tuition and non-tuition costs. With this expansion, the awards were able to now be expanded to Cal Grant recipients since they could use these awards for non-tuition costs. Today, the program currently serves about 350,000 students with household incomes up to $234,000.

Out of those recipients, about half of them are also Cal Grant recipients. Though the impact of the award reduction will be felt differently among students, especially given with the Middle Class Scholarship Award—each student has a unique award amount—it is likely that some students may have to work a few more hours or take out some more loans in order to compensate for a smaller middle class scholarship award.

The impact on Cal Grant recipients specifically could be smaller given that these students tend to receive a Smaller Middle-Class Scholarship Award, and they would not see any changes to their Cal Grant coverage.

Finally, we wanted to note that the Governor's budget maintains the new budgetary approach of funding the Middle Class Scholarship Program one year in arrears. Under this approach, the state is providing awards to students in one year, but paying for them a year later.

And the state's using a General Fund cash loan to cover the payments to students. Once one time funding becomes available, we recommend the Legislature give high priority to retiring this debt and returning for paying—returning to paying—for Middle Class Scholarship Awards in the year in which the costs are generated.

We recommend this, given that funding the program one year in arrears can place the state in a difficult financial situation if its cash position weakens and it's no longer able to borrow internally in order to cover the loan. Thank you and happy to take any questions.

Thank you. Next, please.

Good morning. Thank you. Chair Alvarez and Committee Members. On behalf of the University of California, I want to thank you for the opportunity to speak about our trends, goals, and outcomes. I'm Dr. Apri Medina, Director of Policy and Analysis for Student Financial Support at UC.

I'm also a grateful beneficiary of programs like the CAL Grant and I understand their importance to access and completion. So, I want to thank the Legislature and the Governor for increasing the state financial aid available to students over the last several years.

We appreciate the Legislature for hearing the concerns of our aid administrators and taking actions to implement changes to support streamlining the Administration of the Middle Class Scholarship Program.

The shift in counting institutional, non-need based scholarships towards self-help has showed a 15% decline in revisions to students' financial aid at one campus or other campuses, while not able to provide data, did note anecdotally that they've also seen similar trends. This change has improved the student experience with the program.

Additionally, with the earlier setting of the phase in factor, our campuses are able to include the Middle-Class Scholarship upfront and conditional aid awards for prospective students.

However, with the data exchange required between the campuses and the Commission averaging about two weeks to settle a middle class scholarship when changes are needed, we continue to see challenges in the Administration of MCS, given the volatility of other financial aid student costs and change of financial circumstances, as these elements are fluid.

So, we are concerned about the proposed reduction in the program in the Governor's budget. At present, our average MCS award is approximately $3,200 per recipient. The proposed 513 million for the program would lead, on average, to a reduction of about $1,600 per UC recipient.

In 2024-'25, that represents about 3.4% to 4.6% of the average cost of attendance, depending on upon whether the student lives on campus, off campus, or with parents. The Middle-Class Scholarship Program is an important part of the pathway to our debt-free education and reductions in this program slow our progress towards that goal.

Since it is a program that addresses the total cost of attendance, the program would need to increase every year to keep pace with inflation and of course, greater stability is our ultimate goal for Middle Class Scholarship, and we look forward to working and continuing that work with the Commission, as well as our segment colleagues. Thank you.

Thank you. Do we have the Commission present for?

Yes. Good morning, Chair and Members. Justin Hurst. I am the Government Relations and Advocacy Manager for the California Student Aid Commission.

I will just start by saying that the Student Aid Commission recognizes that this proposal does represent a reduction in student aid year over year for students at a time where they face rising cost of living and this is reflected in the strong demand for applications such as the FAFSA and the CADA.

That said, we are appreciative of the Governor's support for the program, in the Governor's budget, and that this in particular funding level at a targeted percentage continuation of the previous practice mentioned by the LAO is something that the California Student Aid Commission appreciates and simplifies administration from our perspective. I'm available for any questions.

Thank you.

Good morning, Noelia Gonzalez and I'm the System Wide Director, Financial Aid at the California System, California State University Office of the Chancellor.

The CSU is grateful for the state's investment in the Middle Class Scholarship Program which has provided much needed financial support for hundreds of thousands of CSU students and is an important part of our financial aid packages for students.

Middle Class Scholarship funding allows us to strengthen affordability for our students and is in line with our CSU Forward and Student Success framework. Our goal is that every student in California would be able to afford the total cost of a CSU degree and that every student with family incomes below $75,000 can graduate debt-free.

During the '24-'25 academic year, 250,000 students at the CSU received $709 million in funding from the Middle Class Scholarship Program. That average award was $2,835 and it covered approximately 10% of the students' total cost of attendance. This was an increase of almost 60,000 students over '23-'24.

For '25-'26, our students have been awarded about $721 million in middle class scholarship funding. Reducing that percentage from 35% to 17.5%, as proposed in the Governor's '26-'27 budget, will reduce the funding for our students by about half. The average award will go down to about $1,600 and will cover only about 5% of the students' total cost of attendance.

A reduction in middle class scholarship, alongside the changes to the federal student loan programs, will negatively impact our middle class students that do not receive any other need-based funding even though they still have need. The 2025 Budget Act did make some statutory changes to streamline the Middle Class Scholarship Program and we are appreciative of those changes.

We did see a reduction of about 15% in campus workload across the whole system. We look forward to fully implementing all the changes in '26-'27, hoping for an even easier workload for our campus offices. Thank you. I'm happy to answer any questions.

Thank you. Thank you all. First, just a clarifying question to the Commission. The Middle Class Scholarship Program is only available for the three segments in California, if you're a student at the three segments, is that correct?

Justin Hurst. Yes, that's my understanding.

Okay, thank you. And then, in terms of amounts, and I'm looking at the agenda that was prepared for today on page six for everybody's reference. I know what the average award amount is. I'm trying to, as I'm speaking, I think I'm figuring out this table is the bars are the number of students that are the recipients.

Is that correct? That's not the award amount.

Yes, I'm happy to answer that. Natalie Gonzalez with the LAO. Yes, the bars are the number of recipients and then the line is the average award amount. So, this figure 6 is showing that traditionally low, higher income students are receiving a larger award amount.

Okay, thank you. I am—you further clarified that. I thought it was the average of all awards, but no, it's the average of the award for individuals in those brackets.

Okay, thank you. Very helpful. All right, turn it over to my colleagues. Dr. Patel.

Correct.

Thank you for your presentations today. As a student who came out of middle class and drifted in and out of middle class into lower income tiers, seeing opportunity for our middle class families is very, very important to me.

Just to put a fine point on it, what is defined as middle class in San Diego is very different than what is defined as middle class in other parts of the state. And when we look at reducing the opportunities, the financial aid opportunities for those students, it's quite heartbreaking for me.

Certainly, as Noelia, you mentioned, there are more opportunities afforded to our lower income community kids to access college, to get a debt-free college experience. But for middle class families, we're increasingly facing pressures, economic pressures, home ownership, or housing pressures. To see this opportunity, to see it reduced, is very difficult for me.

But looking at the solutions offered, right, when we—sometimes we have to make these heartbreaking decisions. But looking at the solutions for perhaps more hours of work study or increased borrowing, I would like to interrogate that a little bit.

Is the UC and the CSU system, the community college system, prepared to offer more work study hours and opportunities to compensate for that difference? And is there time in student schedules to work those more hours?

Or how else can that cost differential be absorbed so that we reduce the impact to the student and the family as they pursue higher education?

So, for the federal work study program that is funded by the feds, the Department of Education, we have seen a slight decrease in the funding that our campuses are receiving next year due to the federal budgets. So, we haven't seen an increase in the campus fundings in many years.

And this next year, for '26-'27, we are starting to see a slight decrease in the campus-based funds. And so, one is the federal work study, and the other one is the FSCOD, which is a Federal Supplemental Education Opportunity Grant.

Our campuses award federal work study based on financial need, sometimes based on other provisions, given the availability of jobs in the area. However, all of our campuses, if a student is not awarded a federal work study, we'll provide it, so long as they meet the minimum.

They have to have at least, you know, a dollar financial need in order to be eligible to be provided the award. So, our campuses would be opening that opportunity if it wasn't already afforded.

Okay, so there is some opportunity for a student to make up the difference through work study, but it might not be as dollar for dollar as we might hope for.

Correct.

Also, in context of caps now on borrowing, total amounts borrowing for parents with their student, you know, loans for their students, as well as for students themselves for lifetime borrowing, are we putting that in the context of these reductions as well and whether students can still afford to end up pursuing that higher degree, perhaps in a professional career pathway?

Only about 6% of UC student parents borrow the parent loan, at present. What we could see is an increase to that share if the middle class scholarship were to be reduced.

Very similar at the CSU. We don't have a lot of parent borrowers, but we do feel that with the changes, if the middle class scholarship is reduced, we'll see an increase in that parent loan borrowing. And due to the limits that are being imposed now at the federal level, those loans may not last for four years.

As you know, they're maxed at $20,000 a year with a lifetime limit of $65,000. So, if they borrow the full 20,000, they'll be out in about three years of funding. They won't have eligibility for that fourth and sometimes fifth year.

Yeah, as a mom who's raising kids right now, who has two in college, the impacts of tuition certainly hurt our pocketbooks quite a lot. And so, for those who are in middle class, I can understand this now opening up new considerations for borrowing and perhaps entering into situations where debt becomes untenable as well.

So, just to put that out there and on this chart that we were looking at on page six, just to highlight the reason why, just to clarify, the reason why the average award amount is lower in those lower income brackets is because it's compensated by Cal Grant.

And did I understand correctly that the Cal Grant award amount is increasing? Is that correct?

The Cal Grant award amount is not increasing, but the spending for Cal Grant is increasing due to more recipients. And the award amount does follow what UC and CSU tuition is. So, as tuition increases, it will increase.

Perfect. So, not the award amount, but the pool, the overall number of students accessing Cal Grant is increasing.

Correct. But the award amount, I guess, would be increasing at UC and CSU since both of those segments are getting a tuition increase. So, it will increase.

Okay. Thank you. Thank you for that.

Thank you. Mr. Fong.

Thank you so much, Mr. Chair, and thank you so much to all our presenters for the updates and information here.

Just to follow up on Dr. Patel's question, considering that the Governor's proposal includes more funding for Cal Grants and less funding for the Middle Class Scholarship, do we know what the impact would look like for low income students who are eligible for both programs?

Happy to answer that. Natalie Gonzalez with the Legislative Analyst's Office. Specifically for the reduction to the Middle-Class Scholarship, we don't have data on how each student would be affected. I think it can be challenging to know, given that the award amount varies significantly for each student for the Middle-Class Scholarship, but they will potentially have to work a few more hours or potentially take out a few more loans.

But for the Cal Grant students, their tuition will remain covered under the Cal Grant Program, so that will not be-- they will not be impacted. Their tuition costs will not be impacted by the reduction to the Middle-Class Scholarship.

Thank you for that context. Appreciate that. Anybody else want to add to that? Just another question I had is, in terms of the reduced-- the proposal is adopted, average aid will be reduced by half. Will the segments be able to help make up for the reduced allocations?

Do you want to go first?

We don't have additional funding to offset the decrease.

Same at the CSU. We wouldn't have those types of funds to offset all of those dollars lost.

Okay. Thank you for that context. But anything we can do to continue to expand access to higher education to really help our students out, that's something that's critical, and so I just wanted to uplift that as well. But appreciate the context, the information, and the insights here today. Thank you, Mr. Chair.

Thank you. Let me see if I can articulate a question, and I may not be successful at this. Curious, when a family is in need of a Middle-Class Scholarship because there's a gap either at UC, CSU, or community colleges, how is the actual scholarship amount determined?

Is it-- so the cost of attendance minus traditional-- what is the new term that the FAFSA number-- it's not-- it's not the Family Contribution. It's called something else now. Like, how is that calculated, if you will? Just trying to get a sense of that.

So the award is determined using the cost of attendance, less need-based gift support from federal, state, which would include the Cal Grant and institutional need-based gift aid. And then from there, for families who earn over $100,000, their parent contribution is taken at 33%, so it's a portion also deducted from that, but only for those families who have income of $100,000 or more.

So walk me through that again. So a family with an income of over 100,000, the parent contributions expectation is what?

It's 33% of whatever the calculated parent contribution is from the FAFSA.

Okay.

Yeah.

So whatever the FAFSA said the parent contribution should be, 33% of it is what Middle-Class Scholarship expects parents to participate in? And so the other two-thirds is what becomes the Middle-Class Scholarship?

That's what's remaining, yes. So remaining from the cost of attendance, less those two figures, less a state's self-help aid. So there's a state self-help component as well. It's a little over $80,000 right now. Whatever is remaining after that is the MCS eligibility based on the present budget, and that's where the phase-in factor comes in.

So I guess I'm trying to understand why the awards of folks over $200,000 are averaging over $4,000. If you take into account all of those factors, are these students receiving less aid in any specific number of ways that you see trends in? Like, I'm not understanding the dynamic there.

The high-income students that are over 200 are not receiving any federal need-based aid or any Cal Grant aid.

Okay.

So their gap is bigger, is wider than the students that are receiving other need-based dollars from the federal government, the state, and the institution.

So then, could we assume that the average in this case is very much the average, like you pick any random-- a student from a family that makes that income and they probably all get about that in the Middle-Class Scholarship? Because what I've heard earlier was the scholarship is wide range from a little bit to a lot.

So would it be the case that--and maybe Finance and LAO, you can-- I'm assuming you have a caseload, numbers, not that you've seen, you know, the tens of thousands of students on there-- but do families who earn higher incomes, are they typically more similar, given what was just described, that there's no other federal, state aid?

Natalie Gonzalez with the LAO. It's possible that they may be more similar than students who are receiving Pell Grant and Cal Grant, given they have those other awards, especially the Pell Grant can vary per student, though the student's cost of attendance may slightly vary if they live at home versus live on campus versus live off campus, so that that's a different starting number per student.

Additionally, they might get other scholarships or other different grants that's not the Cal Grant or the Pell Grant, so there can still be some variation in their award amount.

Okay. That's interesting. All right. Yeah. One follow-up question for Dr. Patel.

Can you remind me right now, with the new FAFSA rules, when families are looking for financial aid, they can't count siblings anymore, right? Whether they have-- there used to be a provision that you could calculate in how much you're paying for siblings' tuition and now you--

Correct. The number in college is now one.

Thank you.

Okay. Thank you. We'll hold the issue open and ask the panel for Issue Number Two to please come forward. We will be discussing in this a little bit more of Dr. Patel's questioning earlier on the interactions with federal changes to financial aid, which eliminated some opportunities for students.

So, we can have the panel for Issue Number Two please step forward: Finance, LAO, Student Aid Commission, UC/CSU, and Community College Chancellor's Office. Just missing Community College. Maybe they're not here. Okay. Let's just get started. We'll go ahead and get started with Finance again.

Hugo Solis Galeana with the Department of Finance. Finance does not have any remarks on this issue, but we're happy to take questions at the appropriate time.

Okay. LAO.

Natalie Gonzalez with the Legislative Analyst's Office. The federal government recently made several changes to student aid programs. Some of these changes relate to federal student loans as seen on Page 10 of the agenda.

Just at a high level, some of these changes include the annual and lifetime caps on Parent PLUS Loans, eliminating the Grad PLUS Loan program, as well as some-- the federal government made some small modifications to Pell Grant eligibility and created the Workforce Pell Program for programs that are shorter than four months in duration.

From the changes to the Parent PLUS Loans, the caps that are now put on those loans, as well as the elimination of the Grad PLUS Loans, the primary impact will likely be that some borrowers will now have to turn to the private market in order to get their secondary student loans.

For the Grad PLUS Loans, specifically, these borrowers are likely to be students enrolled in higher-cost graduate or professional programs such as dentistry, law, or medicine. For the Parent PLUS Loans, these borrowers are likely to be parents of students at private universities, given these students are more likely to take out larger levels of debt compared to students at public universities.

However, as noted, there are still parents at the public segments that take out Parent PLUS Loans and could be impacted by these caps. Among these borrowers, those who are lower income will likely be the most impacted given they may receive loan terms that are less favorable, such as with higher interest rates or less flexible repayment plan options. Some borrowers may not even be able to access private loans, given they would not have the necessary credit or access to a co-signer.

It is not yet clear what, if anything, the state may want to do or has the capacity to do in response to these federal changes. Thank you, and happy to take any questions.

Thank you. Do you have any comments from the commission?

Justin Hurst, California Student Aid Commission. At a high level, I'll just offer two brief comments: one, that these borrowing caps that were imposed by HR 1, in terms of their interaction with Cal Grant and Middle-Class Scholarship, the commission does not expect significant impact to our main programs such as Cal Grant and Middle-Class Scholarship.

And then the other provision that I'll speak to briefly is, in addition to those caps, one of the provisions of HR 1 included the addition of a Workforce Pell Program, and that is a program that the California Student Aid Commission is actively monitoring, but it is still subject to the federal rule-making process, so it is not yet determined how the state will fully be able to benefit from that. I'm happy to answer any other questions.

Thank you. Appreciate that update. The UC or CSU have any comments on the impact?

Yes, Noelia Gonzalez again for the CSU. As noted, there were some federal changes that will be set in stone July 1 of 2026, so for the 26-27 year. The first issue is going to be the eliminated Grad PLUS Program.

This loan program helped our graduate students fund their education as there is very limited grant funding for our grad students. In 24-25, over 2,600 students borrowed just over $38 million in Grad PLUS Loans. We do foresee that these students will need to turn to the private loan market in order to fund their education.

We are, as a system, working with some lenders to try to get the best percentage interest rates for our students and trying to eliminate the co-signer rules, and so we're working with our lenders to try to help our students out.

The next big issue that hasn't been talked about too much is the Federal Direct Loans will now be prorated based on enrollment intensity. So similar-- it will be treated similar as our grant programs.

So for the CSU, the legislation represents a significant reduction in federal financial aid access for our part-time students, many of whom borrow conservatively and rely on loans to remain enrolled. Final regulations have not been released by the department, but we have about 21,000 of our students that borrow loans are enrolled part-time.

Forty-eight percent of those students do not have grant aid, and applying a 50% proration on the average loan amounts for the approximately 21,000 students will mean a reduction of student loans for about $97 million in a year. And the loan probation will affect all of our students: undergraduate and graduate, and credential.

The new Parent Loan limits is also a concern. They'll only be able to borrow $20,000 a year per child, while the maximum lifetime amount per child will be $65,000. A parent will not be able to borrow the maximum yearly amount for their child if they plan to borrow for four years.

In 24-25, the CSU had 9,600 parents who borrowed Parent Loans, totaling over $177 million, and the average loan was approximately $18,500. Again, this will-- the anticipated student enrollment effects will be on our middle-class students as they receive little to no grant funding, and these families rely on these funds not only to pay for school, but also for students that are choosing to live on campus.

We have created a website for information for our students and their families as well as letter templates that we'll be sending out so we can communicate this to our students.

Not a part of HR 1, but a looming issue is the Pell Grant shortfall. The Congressional Budget Office is projecting an $11.5 billion shortfall for fiscal year 2027. This deficit, driven by expanded eligibility and inflation, could lead to cuts in aid for our low and middle-income students.

In 24-25, we had over 229,000 students awarded a Pell Grant for almost $1.4 billion. That's a 10% increase in the number of students and a 27% increase in the amount of funding over 23-24.

In 25-26, the number of Pell Grant students grew by about 10% to 253,000 and we've awarded more than 7% in funding close to $1.5 billion. The shortfall could lead to reduced maximum award amounts, stricter eligibility requirements, a reduction from the six-year maximum, or an elimination of Summer Pell Grant for future academic years. Thank you, and I'm happy to answer any questions.

Thank you. Does UC want to add anything?

Yeah. Thank you, Chair Alvarez and committee members, and apologies. I have a little tickle in my throat. For the record again, I'm Dr. Aprí Medina, Director of Policy and Analysis for the University of California. The University of California shares the same concerns as our colleagues at the CSU in regards to the changes under HR 1.

As I mentioned previously, only about 6% of our UC undergraduates have parents who borrow money through the-- for their education, but those who do rely on it rely on it heavily. Fifty-two percent of California resident borrowers would have exceeded the new annual limit if this provision were in place in 2024-25.

That's a combined total gap of $58 million under the new provision in one year. It's also worth noting that higher-income families are far more likely to exceed the new annual limit. While the university works to give as much financial aid to our students as possible, with 54% of our California undergraduate students receiving full tuition coverage from financial aid, loans are still important to students who need them.

Additionally concerning was the change to loan limits for graduate students differentiated by the professional degree versus non-professional degree program definitions, with professional degrees having higher loan maximums of $50,000 per year and up to $200,000 versus all other non-professional graduate programs.

That would set a $20,500 annual limit, which is the current limit for graduate loans and $100,000 aggregate limit again for the non-professional graduate programs. So the concern here is the department's revised definition of professional degree.

It's very restrictive and it would reduce access to federal loans for higher-cost programs traditionally seen as preparing students for professions such as nursing and teaching. So this, in combination with the sunsetting of the Graduate PLUS Loan program, means a reduction in access.

Students are going to be pushed to the private loan market, but the private sector will not be able to accommodate all of those borrowers, in particular low-income students. Without credit or financial assets, they will have trouble obtaining loans and they'll be prevented from pursuing these programs focused on practical application of skills for workforce needs.

It's an opportunity cost for our students, but it's also a loss for our state. I will also note that UC's graduate population is only slightly less socioeconomically diverse than its undergraduate population, 36% who are Pell-eligible versus 38% of new domestic students over the past three years.

Medicine, education, other health, and other non-health professional programs have a similar or slightly greater share of undergraduate Pell recipients than all disciplines.

So in recent analysis--and it's in the attachments that we've provided in Figure 1--under Table 1, a total of 5,700 graduate borrowers would face $178 million loss in loan eligibility with the changes to the federal loans upon full implementation. You'll see right there about 2,300 students would be impacted in the first year.

Table 2, just below that, is a subset of these borrowers from Table 1, but this one is focused on our professional degrees as defined under HR 1. About 650 students in health professions and 1,000 law students will experience a funding gap for a total of approximately $37 million.

Table 3, we broke down by discipline, so again, this is using the new definition. All of the degree programs that you see listed there qualify under the new definition for professional degree for the higher loan limits of $50,000 per year and $200,000 aggregate lifetime.

Still, even with those higher limits, we see an estimated average gap of $31,000 per student per year for our dentistry students. Law students, however, represent the bulk of students impacted by the changes to student loans at the graduate level. And I do want to emphasize that the university does not have the funds to backfill for this lost graduate loan eligibility. Thank you.

Thank you. Community Colleges.

Chris Ferguson, Executive Vice Chancellor for Finance and Strategic Initiatives at the California Community College Chancellor's Office. So as it relates to borrowing and federal loans, generally, we have a very small student population that takes out federal student loans.

Between both the direct and--or sorry--subsidized and unsubsidized loans, we had about 181 million in uptake, and that was spread across roughly 25,000 students. So that's on a base of 2.2 million students. So overall, you know, our students are taking substantially fewer federal loans.

But what we're focused on in HR 1--and we're working with our partners at UC and CSU as well as the Labor and Workforce Development Agency--is the opportunity of Workforce Pell and what that could represent for short-term upskilling and reskilling programs for our students.

There are certainly a lot of rules that are still being worked out in the regulatory phase at the federal level, but we are working intersegmentally and across state agencies to make sure that we've got the data connections in place to implement Workforce Pell.

We aren't certain that it will be a significant population, but it will be meaningful to our students nonetheless. And then, I would also highlight that there is a downstream benefit to our districts in that Pell headcount is part of the Student Centered Funding Formula. So to the extent additional students ultimately qualify for Pell, our districts would also see additional resources to help support those students in those programs.

Great, thank you. Okay, we'll bring it back to the members here. I think my first question, just to get a scale magnitude of impact, I heard two numbers in different ways. From the UC, I heard 52% of students would exceed the annual limit on loans. Is that correct?

Fifty-two percent?

If this were to be applied today or to current year?

Apologies.

And I heard from--as you find that--I heard from Cal State, 2,600 is the number of students who-- I think that related to the number of students--I jotted down the notes here--who would also currently exceed? Is that correct?

The 2,600 were the students that are borrowing the Grad PLUS, so they will no longer be eligible. That's about a $38 million loss.

Okay. 2,600 of those who are receiving Grad PLUS would no longer be eligible?

Correct.

Okay. Do you have a breakdown of what fields those individuals are in? Just--

I don't have it on me, but we can provide that.

Great. That'd be helpful just to get a better picture, obviously. Appreciate the UC brought forward a table here where it identified some of the-- I assume these are some of the professional degree disciplines, not all of them, that will have impacts. What was the 52% number about?

Yes, correct. Correct. That was the number of California resident borrowers who would exceed the new annual limits for the Parent Loan.

For the Parent Loan?

Yes, correct. So that's for our undergraduate population.

Parent Loan, which is 20,000 a year?

Correct.

And what about students? Have either of you done any retrospect assessing how many of your current students in your graduate programs would have exceeded this new limit if you look back at the aid that they received and took into account how much loans they used?

For our graduate population?

Yeah.

So, yes. That's actually in Table 1. So when we look back at-- so, Table 1, we looked back at 2024-25 students, and those under the graduate academic column, those are students who would not meet the professional degree because their academic programs, but if we account for the new loan limits and the sunsetting of the Graduate PLUS, that's the impact to them if that were to be in place today.

So in your case, 1,200 students would have been impacted in--

1,200 graduate academic students would be impacted if the provisions were in place-- well, with the sunsetting of the Graduate PLUS Loan program.

And 1,600 students would exceed the limit on borrowing. Is that what this part of the table shows?

1,600 students, professional students, as defined, would exceed the borrowing limit.

Okay.

And then, other professional, that column defines what we consider today as professional degree programs, but which have now been removed from the definition. And then, the combined represents, again, the total loss amongst all of these graduate students with the combination of the sunsetting of the Graduate PLUS Loan because now they don't have the ability to borrow at these new limits that they're being pushed into for those other professional students.

Thank you. That's-- I was trying to get a better picture of exactly who we're talking about, so that's helpful. I know CSU doesn't have that prepared today, so I'd like to see that and I'd like to see a breakdown on what the degree is, whether professional or non-professional, and for UC, what the other professional degrees are, just to get a sense of that and whether-- there are workforce impacts.

Healthcare is highlighted, obviously, but there are others as well, and I'm just curious to what impact that's going to have in those industries. Had another question, which I am blanking on at the moment, so I'll turn over to Dr. Patel.

Thank you for those presentations and putting a fine point on some of the things we're thinking about here today. I want to highlight that many of the folks that are in the middle-class were just one generation away from being lower class.

We've done such a good job in California with social mobility that when we look at these students who are in middle-class, they don't have generational wealth to tap into to cover the difference.

With that as our foundation or, you know, a starting point, is there any possibility of the state establishing a secure loan-type program or fixed interest rate program to help bridge the gap for these students?

Hugo Solis Galeana with the Department of Finance. The Governor's Budget does not include any new undergraduate or graduate loan programs. Establishing a new loan program would likely incur significant costs which could be difficult to fund in the current fiscal climate.

Thank you. I think our CSU representative had described a possibility of partnering with the private market to establish better processes, maybe?

Yeah, we've been working with the private student loan market, which is lenders and their kind of own agency that disperses dollars to facilitate the process for students to see if we can work with them on ensuring that our students have the best interest rates.

They either, if they have to have a co-signer, there would be a provision where, after a number of years, they could remove the co-signer from their loan. So we're trying to work with them to ensure that we have some type of plan for our students; again, as the UC has mentioned, that it wouldn't be available to all of our students due to their income or to their lack of credit, but we're hoping to help at least some of our students with that-- with those partnerships.

Yeah. Certainly establishing credit, as we all know, is not an easy thing, so we want to find as many different strategies as possible to help our students continue their social mobility and actually return service to community as they grow up. Thank you.

I remember, and I don't want to forget, Mr. Fong, so I'm going to jump briefly in front of you. I'm curious as to what other states may be doing in this potential loan programs.

I think we do provide loans in other ways to things in the state, whether it's small-business loans for sure, infrastructure loans. There are other loan products the state does produce. Obviously, we'd have to acknowledge, you know, the outlook and we'd have to establish procedures and mechanisms to recover any costs associated with that, but I think perhaps even if we did that, it may still be at a better interest rate to students than what is available currently in the private sector.

So I think we should put that on the board as a potential idea. I appreciate you bringing that up. I would also say that the other thing that this triggers for me is we've got to figure out a way--and the reason I was asking about who the professional degrees are--is we've got to figure out a way to fund particularly our workforce needs.

And it's not that other degrees aren't valuable, but certainly, where we have a need, we need to figure out how to do that. And I think it also-- you know, difficult moments and there's no-- I think there will be people who are hurt by this, no question about it, but we should be looking at things like dual enrollment, which I know, you know, our chair from Higher Ed is doing some work in that space.

How do we continue to incentivize that? More 2 plus 2 programs with our community college; you achieve savings that way, more accelerated programs, three-year degree programs as opposed to four; you save money that way, allowing professionals to get their degrees with their bachelor's as opposed to requiring credentialing like teachers, post a four-year. I mean, this is our time to start thinking about doing things a little bit differently to make sure we can produce the workforce that we need for California.

And I would hate for the moments to go by and just say, well, the big, bad federal government, you know, made it hard, so let's find a new way to fund the same thing we were doing before when the outcomes may not be the outcomes we want to achieve. And so, I just want to put that on the table for everybody to think about.

How do we incentivize those ways to save money for students to get them the education that they need, and not just the education they need, but the need we have as a state for a workforce and doing it in a way where we have different types of competency achieved for degrees as opposed to traditional, you've got to go to school for four years?

These are things we should be all talking about as a way to achieve savings for students so that they don't have to get into debt, and so I hope we take this as an opportunity, again, acknowledging that there are definitely circumstances in which some people will be limited from these opportunities if we don't have a mechanism for loans, given what the federal government has done, but that should not be the only solution that's on the table. Mr. Fong.

Thank you so much, Mr. Chair. I appreciate your comments, and thank you so much to my colleagues, and thank you to all the presenters again for the insights here on impacts. Just in terms of the enrollment, have we seen a reduction in applications in volume for graduate or professional programs in anticipation of the new loan caps?

I have not heard of any reduction, but I also have not-- I don't have data or information on that, but I could check with my graduate colleagues and return to you.

Okay, thank you.

Same for the CSU. We haven't heard of any reduction of applicants for the programs. We won't know where we land until probably closer to the fall semester starting. We may have had students that have applied for admissions but then decide not to attend due to some financial issues, but we can get that data as well, applicant data.

So it's application data, and just in terms of the enrollment as well, so thank you for in advance for that information. And then secondly, as we heard from a number of colleagues as well, we want to make sure we continue to build out the workforce here in California.

It's critical to California's economy and to future of our state. So when we look at graduate programs, professional programs, are there any thoughts to possibly look at--think of everything here--to really look at maybe bringing down costs and reducing tuition on some of the graduate programs? Just want to put that out there as well.

Yes, go for it.

Yeah, I don't have information on that at this time because that's outside of the financial aid purview.

Yeah, I don't have information on that at this time because that's outside of the financial aid purview.

Same for the CSU.

Okay, thank you for the context. So this is something that we got to continue to uplift in terms of California's workforce to really make sure that we're building up the workforce of the future.

And- And here in California we know that a lot of our graduate programs are in high demand and we're probably continue to be in high demand. But we just got to continue to look at providing affordable opportunities so that when students do graduate they're not saddled with that for many, many more years going forward.

So those are just want to uplift that and thank you so much, Mr. Chair.

Thank you, Mr. Fong. Thank you. Oh, we have an additional comment. Yes.

Along- Along with the just quickly if I could also add that one of our long term focuses and you know, we're a bit concerned on the graduate level is what this will mean for the

professoriate and our ability to educate those students as well because these programs could ultimately impact the number of, you know, PhD graduates that become academic professors. So we are monitoring that as well.

Well, that's great, great point. Mr. Ferguson. Thank you so much for helping that and the professoriate, the academics and the PhD programs as well. So point well taken. Thank you. Thank you, Mr. Chair.

Of course. Thank you. Thank you to the panel on this issue. We will hold this open and or any potential future action on this issue. So let's move on. I'd ask the next panel to please come forward. This is issue 3 as listed on the Agenda Financial Aid segment update.

Just general trends, interaction between tuition and financial aid, Cal Grant data and obviously institutional aid. We've heard some of these topics but going to try to capture it all with this panel and questions from members as well. So we'll just go down the line, see if there's additional comments. Sorry, Finance.

Hugo Solis Galeana, the Department of Finance. Finance does not have any remarks on this issue, but we're happy to take questions at the appropriate time.

Thank you, LAO.

Thank you. Natalie Gonzalez with the Legislative Analyst Office. We do have some remarks regarding Cal Grant spending. As noted from the revised 25-26 spending level, the governor's budget increases Cal Grant spending by $337 million or 12% in 2026-27. This brings total spending for the program to 3.2 billion.

The higher spending reflects a 9.1% projected increase in the number of recipients and a 2.3% projected increase in the average Cal Grant award amount.

We'd also note that over the past three years, Cal Grant spending has been increasing at a higher rate than the 10 year annual average of 3.7%. In 24-25, Cal Grant spending grew by 8.7% and is estimated to grow by 16% in 25-26.

We estimate that higher spending in recent years is due to both higher award amounts and more recipients. The higher award amounts are primarily driven by the tuition increases at UC and csu.

We believe that one factor driving the increase in recipients is the fact that the community college- the California Community College Expanded Entitlement Program, which was created in 2021-22 has likely not yet reached its full implementation.

Spending for the program increased by 27% in 24-25 and is estimated to increase by 21% in 25-26 and then by 9% in 26-27. CSAC prepared the Cal Grant cost estimates underlying the Governor's budget in October and these will be updated at the May revision.

Given the projected out year deficits, covering existing Cal Grant costs could be challenging even if the costs do come in lower in May. As a result, the state will likely not have the capacity for further program expansion over the next few years. Thank you and happy to take any questions.

Thank you. The Commission.

Justin Hurst, California Student Aid Commission I will just reiterate earlier that I mentioned as of currently a week ago, we are seeing still strong demand for student aid in the state. In particular, I'll provide a couple of numbers on our FAFSA and CADA submission rates.

As of the end of February. For the FAFSA we have received over 383,000 applications and that represents over 100,000 increase over a year to date. For the California DREAM Act application we had received over 5,700 applications which represents over a thousand increase year to date.

So there is demonstrated need in this state for financial aid for students as reflected in some of the earlier discussion and I am happy to be available for comment.

Thank you. Let's start with the CSU. Do you have any comments?

Yes, we always have comments. So we do package all of our students that have applied for financial aid. We start typically packaging with our federal grants followed by Cal Grants.

If the student's not a Cal grant student, we do award the state university grant for the students that meet the criteria and then we will follow up with any scholarships they're receiving.

And the last grant we award is a middle class scholarship as that's kind of the last dollar in. If the student's participating in either College Corps or the DREAMER Service Incentive Grant, we do award those funds and we finish packaging the student with work study and federal loans.

For the 24-25 year, the CSU dispersed financial aid to 381,000 students over $5.5 billion in federal, state and institutional dollars. That was a 12% growth in dollars from 23-24 and a 3% growth in the number of students.

The $5.5 billion was made up of 4.2 billion in grants, scholarships and waivers, 1.1 billion in student loan dollars, 28% of our undergraduate students borrowed a federal student loan and $30 million in federal work study. The average award was about $14,500, which was $1,000 more than in the 23-24 academic year.

In that same year, we dispersed over $752 million of State University Grant Dollars to 153,000 students. That was 133,000 undergraduate students and 20,000 credentialed and graduate students.

We also dispersed 651 million in CAL grant fee dollars, 223,000 undergraduate students and over $190 million of CAL grant access funds, 212,000 students, which includes 7,100 students that were awarded a student with a dependent award and 1150 students with a foster youth award.

For the 25-26 year, the CSU has allocated $814 million to the state University Grant program and that includes an additional $55 million due to the tuition fee increases.

In addition, for this academic year, the 25-26 year, the CSU has updated our State University grant policy to provide low income students a Cost of Attendance Award to support high need students with cost of living while attending the CSU. Happy to answer any questions.

Thank you. Go to Community College next.

Good morning. My name is Allison Beer. I'm a Dean for Educational Services and Support at the California Community College Chancellor's Office. College affordability remains a core goal of the Chancellor's Office Vision 2030, especially for our equity and support goals.

As part of that strategic plan, by 2030 we aim to increase with equity the number of California Community College students receiving Pell Grants and the California College Promise Grants, also known as CCPG, by 10%.

Though despite our rising financial aid awards, affordability remains a pressing challenge for our students that has grown through continuing increases to students cost of living and uncertainty of federal financial aid programs.

Ensuring that students complete the FAFSA or the CADA is the most impactful way that we can maximize financial aid and ensure students have resources for meeting their full cost of attendance, including tuition and fees, and their living expenses such as food, housing, transportation, and childcare.

For the current financial aid cycle, we are encouraged to see that total financial aid applications are increasing from recent years. The Chancellor's Office has partnered with C CSAC, our colleges and community organizations to support financial aid outreach and application assistance, in particular through our ICAM Go to College campaign and partnerships for hosting Cash for College workshops.

In addition, leveraging funds from the 25-26 state budget, the Chancellor's Office is in the process of awarding grants to community based organizations that provide financial aid application support to prospective and current students.

These state funds will help meet goals for increasing financial aid receipt and providing targeted support, including for undocumented students and those from mixed status families and students living in rural and other underserved areas. Aid receipt among California community college students has continued to increase.

During the 24-25 academic year, California community health colleges awarded over $4.3 million in financial aid to over 920,000 students. That was nearly a 23% increase in total aid compared to the previous academic year. The federal Pell Grant is the largest source of financial aid for community college students, which accounted for over $2.2 billion in awarded aid.

That's then followed by other Chancellor's Office and state financial aid programs. The CCPG Award is our largest in terms of number of recipients. Over 850,000 students received that award, valued at over $748 million.

It's also the most accessible of the Chancellor's Office programs because it has the fewest eligibility criteria and students only need about $1,100 in unmet need in order to receive that tuition assistance. The Student Success Completion Grant was awarded to over $125,000 $125,125,000 students totaling $451 million in aid.

SSCG eligibility has increased in recent years, including higher award amounts for former foster youth and students with disabilities enrolled in nine or more units as part of an academic accommodation program plan. Our California College Promise, also known as AB19, provides $9 million $91 million in support to students.

$49 million was spent on fee waivers and direct aid to students, with the remaining funds supporting other services including counseling, academic support, and basic needs services. And for CAL Grants, CAL Grant B and C recipients for community colleges has continued to increase. For the 24-25 year, $299 million was awarded to 187,000 students.

However, that continues to represent less than 10% of our overall nearly 2.2 million student population. And so we continue to advocate for the CAL Grant Equity Framework and partner with CSAC to reduce administrative barriers for students to receive that program.

I'll conclude my remarks with the top priority for the Chancellor's office, and that is ensuring equitable resources for community college financial aid offices. The current funding formula for our student financial aid Administration funds is outdated. When it was established, it accounted for only 108 community colleges. Currently, we have 116 leaving colleges with a 6% funding deficit.

Additionally, the overall funding formula only considers our CCPG fee waiver information, though there has been growth in other financial aid applications, including Pell Grants and other forms of state aid. So we continue to advocate for updating the student financial Aid Administration funding formula and ensuring a COLA for this state funding each year. Thank you very much.

Thank you. So you see, have comments to add.

Thank you. Chair Dr. Apri Medina with University of California The University of California is committing to making a UC education affordable to all Californians. Of course, the main principle driving our financial aid policy is to ensure qualified students can attend regardless of their economic circumstances.

The incredible support from the State of California and our partners at the Commission make it possible for us to provide financial aid that keeps UC affordable. Financial aid is determined using the cost of attendance and financial need.

UC provides federal, state and institutional gift funds including Pell Grant, Cal Grant, Middle Class Scholarship and institutional or what we call UC Grant. I provided a figure for you. Figure 2 Grant support programs for California residents at UC. It shows the various financial aid programs and their total contributions to University of California students.

We provided 3.17 billion in total grant aid in the 2024-25 academic year to our undergraduate students. Our average grant was 24,000 this that academic year. One billion or a third of this aid came from our own UC Grant program.

In Figure 2, you'll observe that the Cal Grant and the UC Grant remain relatively on par in growth across time. The Pell Grant program has over time fallen behind and lost some purchasing power. The Middle Class Scholarship shows a large jump in 22-23 given the revamp of that program to address cost of attendance.

We appreciate the recent efforts by the Legislature and the Governor to expand and simplify the state's financial aid programs. These efforts, especially the middle class scholarship expansion, have had a real impact on our students and affordability.

I also provided a handout on our financial aid program that's in Figure 3 and that's a visual summary of UC's financial aid strategy. You may have seen this before, the chart has a lot of detail, but hopefully I can describe it in brief.

So again, UC's financial aid is based on total cost of attendance, which includes not just tuition and fees, but other expenses like housing and meals. So that's the height of the graph represents the total cost of attendance. Parent income is a central measure for dependent students who receive financial aid.

So as you move from left to right on the graph, you go from the lowest income students to middle income students. And I will note that independent students typically fall at the lower end of that range.

As you'd expect, the amount that we ask parents to contribute goes up and the amount of grant assistance goes down along that same path. So to make sure that the student contribution is manageable, UC uses its own need based grant to fill the gaps.

Backfilling with our grant for any financially needy students who are missing a Cal Grant or a Pell Grant. For example, all UC students are assumed to contribute to the cost of their own education through part time work and if necessary, student loans. That student contribution or self help is represented by that blue section at the top.

And you'll notice that the self help on the left for our lowest income students is lower. That's our debt free program. That's that dash line at 9200. So the middle class scholarship program lowers the self help for many UC students, bringing us closer to the goal for debt free education by 2030.

The program provides scholarships to about 50% of our families with incomes under 60,000. So the level of that bar for the middle class scholarship represents the level of the award.

So true to what we've been saying in this talk today, the award amounts are lower for our lower income students and then kind of grow across the income stream. The financial aid model is working. UC continued to see a decline in the share of our students graduating with debt.

Last year, 60% of California undergraduates at UC graduated without debt. Those who do graduate with debt have nearly 50% less debt than the national average for bachelor's degree attainers. And I'll now turn to some data trends for the university that demonstrate our outcomes of our commitment to affordability.

So that's going to be in Figure 4 in the student loan debt at graduation sheet. Chart A shows the debt trend for California freshman entrance. And chart B shows the trend for California transfer entrants.

We saw declines to a low of 35.7% or 12,000 graduates in 202320 who entered as freshmen and borrowed loans in 2425 we saw a modest increase to 36.6% or 13,000 graduates. Our average loan debt for California residents who entered as freshmen is about $17,000.

By comparison to our public flagship universities in the AAU, the average there is upon graduation is 28,000. So we are significantly lower than the national average for like institutions for transfers. The picture is even more glowing as you'll see in the graphic.

They hit an all time low last year of 35.2% in share of borrowers with debt at UC or about 6,000 transfer graduates. That group's average debt in 2425 was 13,800. Looking ahead to the budget year, we are encouraged by the increased financial aid application filings upwards of 146,000 submissions.

According to our colleagues at CSAC as of February 26th. That's 86% of the volume seen by March 2nd deadline, the March 2nd deadline in 2023 and is tracking just ahead of that year to date numbers. So as you may recall, 2023 was the last application cycle before the better FAFSA implementation challenges.

So the high application submissions tells us that our students are getting through that application process more easily. Our campus colleagues have also noted the significant decrease in traffic around filing issues. However, some of our students from mixed status families continue to be anxious around submitting a FAFSA with the current Administration.

Again, they're faced with a difficult choice of filing the FAFSA , which could expose their family members without a Social Security Number or risking or foregoing federal financial aid like Pell Grants.

So the Commission opened up the California DREAM Application to these students last year and that continues to be an alternative option for those students to secure state and university aid.

My professional experience has given me the opportunity to speak with financial aid colleagues across the country and they are in awe of the level of support we provide in our state. And we are very appreciative of our strong partnership with the state and with our colleagues, the segments and at the Commission.

And I thank you for your time.

Thank you. Thank you all for the work that you do and for your presentations this morning. I want to start with the, I think the most obvious question here, which is the number of applicants, which is just quite substantial. I think it was 100,000 additional for FAFSA and 1,000 or so for CADA, I believe. Correct.

So in the case of FAFSA it's like a 33% increase and in the case of CADA it sounded like maybe a 20% increase. I had not caught that information prior to Today. Is there something else there to that in terms of are we. That's overall numbers, right? It's not year to date. It's not.

It's just overall from the previous year. Or can you tell me more about those numbers?

Justin Hurst, Student Aid Commission. Yes.

So that represents a point in time update as of the previous week, which does represent the current 2026-27 filing period for new filers, which is still ongoing. And one thing I will mention with that data is there are a few different reasons that there could be that increase.

One, there continues to be demand for student aid in the state. Two, as you may recall, there was the implementation of the better fafsa, which had some hiccups, but we're seeing some of those largely smoothed out. And as a result, overall, the filing for the FAFSA has become somewhat simpler.

That being said, as for being able to attribute that to any other particular reason, I do not have that information at this time. But it is good to note that our projections do reflect that the process is reaching more students in the state who we are then able to provide aid for.

Help me. So when you submitted anticipated numbers for budget last fall to Finance, what were the projections then?

I do not have the projections for the end of the filing period at this time. I'd be happy to get back with that.

That being said, I believe my colleague from Finance may have the numbers that were provided as of the October estimate and for preparing for the May revision process, we will be providing updated numbers at that point in time officially for budget projections.

Yeah, I'd like to hear what the number was.

Can you repeat?

Yeah. What was the number of anticipated applicants to FAFSA when you made projections for Student Aid Commission as it relates to all the programs but CAL Grant in particular.

So we don't have specific numbers on how many students filled out the fafsa. The Student Aid Commission, I do not believe provided that information to us. But in terms of the number of students that they project will get CAL Grant, the Number here is 556,000 recipients for any form of CAL Grant.

Okay. Those are individual, not different CAL Grant. Same person getting different CAL Grants.

Well, students can only get one form of CAL Grant, so it's each student.

Okay. That's a headcount. 556. That's the number that you anticipated back in the fall, correct?

That was the number that we had access to at the time.

And is it safe to assume? I think the answer is yes. And given what you're seeing trends, that that probably will be larger.

That would be safe to assume with the current trends to the extent that that scale is something that I can't necessarily predict at this point, but we're happy to provide an update when we have one.

Yeah. Okay. Another question I had and curious some of you were at a workshop we did a couple years ago on FAFSA, and this was before, I think it was before the better FAFSA, which ended up being had its own problems.

But one of the takeaways from that conversation was just the number of students who just don't ever apply to financial aid. I'm curious, and I think that was particularly the case at community college where the number was really low. Are we seeing different trends at this moment in time?

Are we seeing is the new FAFSA increasing numbers in any one of the segments in particular? As you look at the current year, obviously you don't know going forward because we don't know where students are deciding to go.

But is there any of that information that we're seeing increase in applications from any segments in particular compared to prior years?

One thing I will note is I do have some data as of the end of January for the three types of CAL Grant. What I will note is that it is more or less in line with the previous year. There hasn't been any notable increases for the community college system.

The UC is largely similar and as is the csu. So from the current numbers, they are largely in line with the previous year. That being said, they are at this point over a month old. So I do not have the update

as of current the proposed 26-27. I'm looking at page 17 in the prepared agenda just for reference for the panel. The proposed 26-27 budget identifies the number of recipients by segment and community colleges does have an increase of 7%. Notably, I would say CSU has an increase of 14%.

Is there any particular reason, does the CSU have any insight as to why that increase is occurring? Are you seeing any trends on a going looking back towards from 24-25 to the projected or proposed,

we've seen just an increase in general over students that are eligible for financial aid. So not just for CAL Grant. For all of our Fund programs we're seeing. I don't know that we're seeing more students apply, but I think more students are eligible.

We've had a slight increase in applicants, but I just think more students have become eligible.

Thank you. What about community colleges? What are you seeing? Is there an increase in applications or is it an increase in need.

Similarly, we're seeing an increase in aid awarded across our variety of different programs. I don't have the application submission data for our segment right now that we could follow up with that. There have been sustained efforts for supporting students with submitting applications.

So for example, through our I Can Go to College campaign, we host Cash for College workshops at our colleges in partnership with csac and additional grant funding to support community organizations that work with our colleges in some additional resources for our undocumented resource centers as well, supporting students with CADA assistance to ensure they're applying for aid.

Okay, to the LAO or finance, whoever can answer, what is the other public institution? It's minimal. It was a couple hundred students in the last couple years and it's going down to 94. Who are these? Where are these students attending? What are these other public institutions?

Oh yes. Chris Ferguson again, Executive Vice Chancellor, Finance and Strategic Initiatives at the California Community Colleges. Usually that other public institution are adult education programs.

Okay, thank you. Okay, do we have Mr. Fung?

Thank you so much, Mr. Chair. And thank you everyone for the comments on updates and grateful to the Cal Community College's office for uplifting the Cal Grant equity framework as well. And grateful to our chair and colleagues for working efforts.

And chair convened a meeting about a year ago to bring the different segments together talk about Cal Grant equity framework. So the couple questions I had were around the plans to further implement Cal Grant reform. So to the Department of Finance, has there been any additional plans to further implement Cal Grant reform?

The governor's budget does not include an appropriation for Cal Grant reform and that is due to the current fiscal climate making the necessary funds difficult to find.

Thank you. And into the LAO, what are some of the pieces of Cal Grant reform that the Legislature can implement incrementally going forward? Now you touched upon it in your remarks as well.

Yes. Natalie Gonzalez with the Legislative Analyst Office, we given the projected out year deficits, we believe that it may be challenging to implement any elements of Cal Grant reform that would require additional ongoing spending. Just given that it may be hard to sustain in the budget window given the projected deficit.

And additionally, if Cal Grant costs do come in higher, if there are more recipients in 26-27 it will be challenging to maintain those costs. So that that might be something that the Legislature may have to focus on providing allocating funding to that before being able to expand program eligibility.

Okay, thank you for that context. I just want to continue put it up there and uplift Cal Grant reform and the equity framework. This is something that Going to continue to advocate for and to push.

And I'm really grateful for the conversation here today around these efforts and thank you all everyone for the work and efforts around financial aid implementation. Thank you.

Thank you, Mr. Fong. Dr. Patel, thank you.

I have one question and as a scientist, I like to look at data and like to look at impacts as well. Do the segments conduct any kind of research that follows our students in a very General sense, not down to the individual. Do we do any post graduation surveys?

The whole, you know, the goal with the CAL Grants is to help not only students follow their dreams, but to also interrupt the cycles of poverty and to get them socially mobile and get them into good productive careers afterwards.

Do we do any long term surveys with our students, whether they landed well, whether they are moving up the social ladder, anything like that?

At the University of California, we do have a dashboard called Alumni at Work and it provides information about postgraduate outcomes for our alumni and the industries that they work in as well as like average income post graduation.

How long do we follow them?

I'm not certain. I have to go look at the dashboard. It's been a little while.

Because I'm sure the ROI is incredible for our graduates into our economy. Yeah, it's probably pretty impressive. Thank you for doing that.

Similarly, for the community colleges, we have a statewide dashboard called Data Vista which includes employment and wage outcome for our students across the system and as well as by each college and district.

Thank you.

And for the CSU, I know that we probably study it. I just don't know where any of that's at. It's kind of out of my wheelhouse, but happy to do some research and then get back to you guys on that.

Thank you. Yeah.

Jennifer Pacella from the LAO, you might already know this, but Cradle to Career is the state's effort to take data from UC, CSU, the rest of the colleges and connect it with EDD data so that the state will have some information on employment and earnings. It's in its infancy, but those MOU

agreements have been established so someday you could look 35 years out, know if they're employed, know if their earnings are on an upward trajectory, know if they're employed in their field of study.

Thank you for that. I look forward to seeing that data as the years progress.

Thank you. One last thing I'll ask the commission for follow up on is the nonprofit and for profit institutions that receive or have students receiving the CAL Grant. I'm just curious to see what those institutions are and obviously for another time, not for today. I'm sure the list is long, so follow up on that.

Thank you so much. Seeing no other questions, this will conclude this issue. We'll hold this open and thank you all for your participation. We will now take up public comment on those three issue items that we just heard. And then also we can also take after that public comment on the State Library which is on the agenda.

No presentation, but happy to take public testimony on this. So I'd ask anybody who'd like to make public comment to please come forward. Remember to just state your name and affiliation, if any, and provide us with your comments.

We will try to give you a notice when there's been one minute, just to let you know, and I'm going to gauge this. Depending on the turnout, we may be a little lenient on that time. So with that public comment on those three areas, but also on the California State Library issue number four, we may begin.

Welcome. Good morning. Alex Graves with the AICCU on behalf of the more than 80 private nonprofit colleges across the state want to just recognize and appreciate the discussion today around the impact of loss of Grad plus loans for students. We have done some analysis on key workforce areas and impacts.

So among our 35,000 borrowers we find that the majority, about 61% are in health related fields with the top ones being mental health and counseling, allied health, so physician's assistants, physical therapists, those types of professions as well as nursing. So we have a one pager summarizing this.

I'm happy to share with the Committee but really again would echo the need to think about some kind of creative solution in that space, particularly for students who aren't going to be credit worthy.

Second on Cal Grant, just want to uplift our idea for a modest one time investment of 18.2 million to pilot the expansion of transfer portability for non traditional students from community college to our institutions under that expanded entitlement award from several years ago. If those students transfer to UC or csu, they get to use their remaining eligibility.

But if they go to a private nonprofit, they lose it. And from the data we've seen, we think there's about 1,000 students in the last two academic years who have transferred and then lost their remaining Cal Grant award. And then lastly, it was not discussed today, but in the financial aid space.

We also just want to uplift the importance and impact of the Golden State Teacher Grant and would love to join other advocates and organizations in thinking about how we continue to infuse funding into that program to support the teacher pipeline.

Thank You. Thank you. Welcome.

Thank you for the additional time. Do I have it right?

Yes.

Okay. Thank you. I submitted a 13 page letter to contextualize my comments. My name is Professor Julie Elizabeth Muma.

I second the concerns for the middle class and lower class students and the fears that I have for President Trump eliminating just out of hand federal dollars that we've all talked about that are a large portion of the financial aid that goes to students.

And that I would predict that he will do that irrespective of anyone saying that he can't do it legally he will do it.

And I think that we should be planning for that as the fifth largest economy in the world, that we should be making provisions at least to attempt to provide permanent housing and food for the neediest of students. And to say cavalierly that students can just work more. We know that that will impact graduation rates and outcomes.

Everyone knows this.

And for the CSU representative from the Chancellor's office to sit there and and just say it so cavalierly I find rather offensive on behalf of students and behalf of taxpayers because a real fast cursory look shows that that representative when at administrative three levels was being paid $163,000 a year and money is value and we are putting value that is almost double what we pay professors to administrative number three.

And I'm sure she's much higher than that now. The chancellor to be making $81,000 a month when we talk about middle class families are budgeted for $75,000 a year. And to say that that is not unconscionable. I just don't know where everyone's coming from.

So I'm coming to talk about these issues because money matters and we have to start making provisions to protect our students and the most vulnerable ones. And it can be done. And everyone might smirk at me and say it can't be done because they have contracts and the constitutional contractual provisions. I just don't think that's true.

I think it can be put to a judge. You could put it into the provisions of your budget bill and swipe the money straight off the non collective bargaining employees in the CSU across the board. Ask your l what is it loa to do an analysis on that.

You will see that it would cover more than the losses that you're suffering here. And then more money can go directly to students in housing.

I find it personally offensive that here in the Capitol the state Sacramento State President Luke woods after we raised tuition, got his 6% raise and it jacked his salary to $48,000 a month while he bebops around on that campus and students go to a food pantry.

I just, I don't know really what's wrong with everyone, but I just think this sounds crazy and it can be done. And so it seems to me that it's just a matter of political will. And I think you're all going to face the electorate eventually when this all hits the fan. It will all come out eventually.

And so I'm just here speaking for the historical record, not expecting that you're actually going to listen or do anything about it. But you are in a position to do something. And we all know that the architecture of systems is power, and you're holding it.

All of you, all the people that sit here, and all of them would be impacted by this because they're the ones getting the lion's share of the money. And you can say it's just a very small percentage of the overall budget, but it wouldn't feel that way if you were the student being denied aid

that you need to go to school. And so I've included a few of the things that came from my last semester at SAC State. My last full semester with students was after the January 62021 insurrection. And I made comments to my students and I encouraged them to free think.

And it put me in a lot of trouble with the university. But my students responded and what they wrote to me broke my heart because they weren't even complaining. They were excited about all the research they did by being allowed to free think and not being so worried about their grades impacting their future careers.

And so when we look at that contextually, I don't think that we can take all of this out, out of context where it's like, zero, this little budget here and this little budget there, it's all part of it and it's all part of the taxpayer.

So the middle class families making $75,000 a year and being told to pick up the tab when the CSU won't cap their own salaries, and they're not going to.

Thank you very much.

Thank you very much.

Good morning. Chair Alvarez and Members Jason Henderson on behalf of the Faculty Association California Community Colleges. Community colleges serve the students most dependent on financial aid and basic support. For many of our students, access to aid determines whether they enroll and whether they complete.

The California College Promise Grant ensures fees are not a barrier, but completion requires more than just fee relief. Financial aid must align with basic needs support such as SNAP and CalWorks. When these systems operate together and in sync, students can plan with certainty and achieve their academic goals.

As you evaluate these financial proposals, we urge continued alignment across tuition, policy and basic needs programs to protect access and promote timely completion. Thank you.

Thank you.

Good morning, Committee. Dimitri Kails, the CEO of Braille Institute, representing this morning our Braille Institute Library, which serves 20,000 blind and low vision patrons all across Southern California. Really want to start with a thank you to this Committee and Committee Chair Alvarez.

Last year, our funding had been stripped from the state budget and this Committee and others stood up for the people we serve across Southern California who are blind and low vision and need to be able to read, whether it's braille, large print in audiobooks. And this Committee really stood up and thank you.

Good news is we are in the state budget this year. As you know, we just want to be here this morning to ensure that we stay in that budget.

Our services are available to nearly 400,000 people in Southern California, from San Diego up to Santa Barbara, that are eligible because they're blind or they have severe low vision and they can't read regular books. And so we just want to make sure we're available for them.

Thank you for your partnership and I'm really proud to introduce to you Sherry Owen, who, who's with me this morning. She's a veteran, came up from Santa Barbara to speak with you this morning.

Thank you. Welcome.

Good morning, Members and chair. I think it's almost afternoon, not sure, but thank you for meeting with me. My name is Sherry Owen and I am the President of the Blinded Veterans Association of the Southern California Regional Group. I'm also a veteran myself, a United States Air Force Gulf War veteran. And I too wanted to thank you.

I was here last year with the Braille Institute and spoke with some of you, if not many of you, about the need and the necessity that all the veterans have to be able to read their materials. And that means low vision, that means blinded.

The veterans have their equipment we get from the VA, but unless we can download the books available from the Braille Institute and Bard, it makes our items useless to use.

And by you having ss in the line item, by having that money in the line item really is just so meaningful because it allows somebody like me to not be isolated and to be able to read and be part of a community. And I just wanted to thank you all.

Thank you. Appreciate you being here. Thank you. Welcome.

Thank you. Mr. Chair and Members, I'm Christina DeCaro. I'm the lobbyist for the California Library Association. I'm commenting on the state library item on your agenda. And I just want to profusely thank you and your consultants for providing us with this opportunity.

Because the governor's budget does not make any sizable changes to the state library budget, every Subcommitee Member has received a letter from the California Library association indicating our strong support for three items. I will let Members of our association and the public address those in more detail in their remarks.

But in short, we're advocating for funding for two programs that you're familiar with, the California Library Services act, which is the major loaning and lending program of the state, and lunch at the library, feeding the low income children and teens during the summer at the library, and then a program that perhaps the Subcommitee is a little less familiar with, and that is because it is new.

It started in 2021-22. It's funding for ESL literacy programs at the library, which is set to run out in June of 2026. So a very important, immediate need for that program. And then finally, several of your Assembly colleagues are preparing letters to the Subcommitee in support of these items.

And we thank you so much for your consideration.

Thank you.

Good morning.

Morning.

My name is Bill Leach and I'm a tutor. I'm a volunteer tutor for the adult literacy program that she just spoke about. And I've been tutoring for the past year. And so I'm speaking on to support that item on the state library budget.

And I can tell you firsthand, I volunteered the past year, and I can tell you firsthand the enormous impact, and if you think it's a $3 million budget item, but there's thousands, probably thousands of volunteers that are doing it for free, like me, that has a huge benefit.

And I can speak for my tutor, I mean, for my learner, that I've seen a major improvement in his English skills and comprehension. He told me he can speak to his doctor and understand much more what he's saying in English. He can speak to his family in English and they're native in California, but he's from Mexico.

And so I see really the impact of this. So I hope you will consider to continue. Thank you funding.

Thank you.

Hello. My name is Sue Hamel. I'm a library commissioner in Contra Costa County District 4, and I'm here in strong support of a request to increase the California Library Services Act, which was cut a couple of years ago to help balance the budget.

Our request is to add 3.2 million to the program to bring it to 5 million. Without this funding, programs will be significantly impacted. CLSA funding allows us to get items into the hands of your constituents and at a cost of 19 cents per item, as opposed to $20 an item.

These are items that come from across the state, from other public libraries and university libraries that are hard to come by, like large print books for those who are visually impaired. Thank you for your consideration.

Thank you.

Good morning, Mr. Chairman and Members. I'm Carol Frost, the CEO of the Pacific Library Partnership and the NorthNet Library System, representing 32 counties. We are requesting a $3.2 million increase to the California Library Services Act from 1.8 million to 5 million to restore the last two years of the 50% cuts to this program.

CLSA funds support resource sharing among libraries to vulnerable communities. From San Diego to Del Norte, libraries use CLSA funds to share physical and digital materials millions of times annually. Digital books might be the only option for rural areas where a library may be as far as 50 miles away.

Because of the continued 50% cuts, 67 libraries may cancel their shared e magazine collections. And six libraries in the Amador and Lodi area may cancel their link plus book sharing. Sharing materials just makes sense. But we are really at a tipping point with the continued 50% cuts.

We request that you restore the $3.2 million to CLSA as you develop the Assembly version of the budget.

Thank you.

Good morning, Chair Members. My name is Scott Love. I'm a Library Regional Manager with Yolo County Library. But I'm here to my personal capacity. I have worked 40 wonderful, enjoyable and rewarding years in public libraries.

I am here in strong support of the request to restore the California Library Services act funding, which was cut by 50% two years ago. Without this restoration, services will be significantly impacted. As Ms. Frost just said, restoring ESL literacy funding, which was also also set to expire in June, is equally important. These funds support ESL classes.

We currently have two or three going at all times. You all encounter, they always fill up. And these support populations that are most at risk and currently under attack. This funding is key to ensuring all residents in this great state have the opportunity to reach their full potential and have the greatest impact on this state's future.

Please invest in our state and our residents future by restoring these funds so public libraries can maintain these vital resources and programs. Thank you. Thank you.

Good Morning Chair and Staff Carol Gonzales on behalf of Ed Trust West, I'm here to express our strong support for the 3.2 billion investment in Cal Grant as well as the continuation of the Golden Teacher Grant PATH program for an additional year.

In the 2021-22 budget year, California took a bold step to require high schools, including charter schools, to confirm seniors to complete a FAFSA or cater beginning in 22-23. The policy expanded awareness and access to financial aid for thousands of students, especially those who may not have otherwise applied.

We've seen the impact. According to a PPIC report, during the 23-24 financial aid cycle, there was an increase in almost 1500 students enrolling in college. The largest gains came from the lowest income students, and the Governor's budget reflects this reality.

The high school FAFSA completion mandate is an important first step, but we must also invest financial aid, outreach, and administrative support for college students, especially given the uncertain federal landscape, to ensure they can complete and maintain their aid.

California has made meaning meaningful progress towards college affordability and we look forward to working with you and our partners to strengthen these investments so students can pursue their higher education. Without financial barriers. Thank you.

Good morning Mr. Chair. Thank you for the opportunity. David Neben on behalf of the Institute for College Access and Success, we're very appreciative of the Assembly's ongoing commitment to college affordability and student access.

With non tuition costs alone creeping up and surpassing $30,000 annually for many students and those with especially the fewest resources, getting the smallest amount of actual support and bearing the greatest affordability burdens, it is crucial at this time that the State continue to invest in need based financial aid that covers the student's total college costs.

As the state explores the holistic affordability picture, we do urge the Legislature to invest in the Cal Grant B Access Award. This will help California's lowest income students cover critical living expenses including basic needs like food and housing.

Indexing the Access Award to inflation would also ensure that the Cal Grant tuition coverage for UC and CSU does not continue to lose value and supports Californians in efficiently earning higher education credentials that lead to long term success.

Additionally, we appreciate the examination of HR1 and want to flag that a critical change that wasn't mentioned the creation of the Workforce Pell Program.

We hope this Committee and others can support an implementation framework that sets up safeguards similar to those outlined in one of your colleagues upcoming bills AB 1534 so that these short term programs can provide students the value that they that they deserve.

Thank you.

Thank you.

Thank you all. Any other additional public comment seeing? None. Thank you all for your attendance today. We're adjourned.