The California Student Aid Commission (CSAC) voted unanimously this week to adopt a number of policy reforms to the state’s $2 billion financial aid system, following recommendations made to CSAC by The Century Foundation (TCF), a nonpartisan think tank, in a new report titled, Expanding Opportunity, Reducing Debt: Reforming California Student Aid. The changes approved include: expanding systemic outreach and early communication efforts, creating a Fund for Innovation in College Affordability, and taking steps to increase the state’s investment in Cal Grants.

TCF’s report proposes a variety of reforms with the goal of reducing student loan debt, expanding opportunity, and improving higher education affordability. Recommendations range from incremental changes to modernize and personalize how aid is administered, to more significant overhauls, such as consolidating and expanding existing programs to meet students’ true financial needs. In addition to adopting several specific recommendations on Tuesday, CSAC moved to further study more major policy changes recommended by TCF, with the goal of proposing comprehensive financial aid reform to the California Legislature in late 2018 or 2019. The Commission will hold a public meeting June 21-22 to consider the additional recommendations related to the streamlining and consolidation of CSAC financial aid programs.

“We are pleased that this report has provided CSAC with a framework to not only make an immediate positive impact on students this year, but to be able to engage in a dialogue about how best to meet the needs of students going forward,” said Lande Ajose, chair of CSAC. “We are excited to be able to recommend to the Legislature this year three changes that can lead to innovation, more communication and an increase in funding, and to be able to begin discussions around a plan for addressing the role of financial aid in addressing critical college access issues such as food and housing insecurity, and meeting total cost of attendance at institutions of higher education in California.”

The report follows a rigorous research and evaluation period, which began in January 2018, when CSAC commissioned TCF after a competitive bid process. It is based off interviews with more than 50 key stakeholders spanning government, academia, and the nonprofit sectors. TCF Senior Fellows Robert Shireman and Jennifer Mishory and the Urban Institute’s Sandy Baum led the project team, which was comprised of many of the nation’s leading higher education experts.

“California has long been a leader in higher education, and the state does a commendable job of making college affordable through a combination of relatively low tuition, CSAC grants, and institutional aid. Still, more can be done to streamline and strengthen California’s student aid system,” said Robert Shireman, TCF senior fellow and project lead. “We hope this report serves as a roadmap for state policymakers as they continue their work to provide a pathway to debt-free college for students of all backgrounds.”

Details on Report’s Recommendations

I. Broaden & Strengthen the Cal Grant

California’s student aid programs are complicated to explain and administer, consisting of a patchwork of different grant types. Even though the state leads the nation in total aid awarded each year, many students lose out due to complex and overly burdensome eligibility restrictions, such as age, time out of school, and GPA. Moreover, aid amounts are linked to tuition costs, even though college expenses go far beyond tuition fees, and aid available to community college students is very limited. The resulting system is too difficult to understand, and in some cases, fails to reach students who have significant need. The report recommends a three-step process to broaden and strengthen the Cal Grant:

  1. Reconfigure the Cal Grant, consolidating it into one program, eliminating current restrictions that shut out hundreds of thousands of students, replacing eligibility requirements with a simple consideration of a family’s expected financial contribution, and expanding investments to reach initial affordability targets
  2. Revise measures of expenses and need, establishing new targets for the Cal Grant that account for the high cost of living in California, particularly for low- and middle-class Californians, and the true cost of college, moving beyond tuition and fees to create a more standardized method to consider all expenses
  3. Expand the Cal Grant to reduce or eliminate the need for loans, using the revised affordability measurements to provide adequate funding to reduce students’ need for loans or excessive work, ultimately moving in the direction of debt-free college degrees

II. Spur Innovation and Support Quality Choices

The report suggests a number of new approaches that CSAC and the California legislature could take to support students in making constructive higher education choices, such as:

  1. Extend the Cal Grant to certificate and associate’s degree programs at community colleges, whether vocational or transfer-oriented
  2. Invest in a Fund for Innovation in College Affordability, a pilot program to test and evaluate creative approaches to helping low-income and struggling students
  3. Allow the new Cal Grant to be used at private colleges, while ensuring that the grant does not exceed a school’s spending on student instruction, and assessing the need for alternative quality assurance standards

III. Provide Better and Earlier Information

Lastly, the report suggests a parallel reform track for CSAC to implement a modernized, technology-savvy aid system to better provide students with personalized, easy-to-understand information, such as:

  1. Create a user-friendly website, making more personalized and complete information a prominent feature in a simple, easy-to-navigate web interface
  2. Make college estimates and comparisons easier, through a simple check-box on state income tax forms for families to request a financial aid estimate, which would provide estimates for multiple sample institutions (a community college, a CSU and UC campus, a nearby nonprofit)
  3. Improve and compare financial aid award letters, using the agency’s improved web presence to allow students to decipher and compare aid grants across institutions
  4. Increase assistance to students, piloting low-cost interventions to coach students through the aid application and enrollment process, focusing on individuals with the greatest financial need
  5. Facilitate saving for college, building on efforts to inform families about the cost of college and encourage setting aside money in as early as a child’s kindergarten years

The full report, Expanding Opportunity, Reducing Debt: Reforming California Student Aid, is available online here: https://tcf.org/content/report/expanding-opportunity-reducing-debt/.

The TCF-led project team consulted with David Radwin, Elisabeth Hensley, and Erin Dunlop Velez at RTI International, as well as Craig Yamamoto, a former financial aid administrator with decades of experience. In addition, a team of advisors with expertise in financial aid gave input on the recommendations. The advisors included: Debbie Cochrane, The Institute for College Access and Success; Sara Goldrick-Rab, Temple University; Mark Huelsman, Demos; and Evan Weissman, MDRC.