Debt-Free College Could Cost California $3.3B: Study

Under a "Debt Free College" program, students and parents could use the government assistance in conjunction with their own contributions to avoid loan debt

Making higher education more affordable and eliminating student debt could cost $3.3 billion annually, according to a report released last week by the nonpartisan Legislative Analyst’s Office (LAO).

State lawmakers asked the LAO to look at what was needed to build a new state financial aid program that would keep students from taking on college debt.

A “Debt Free College” program for resident full-time college students would require additional funding to the California Community Colleges (CCC), University of California and California State University systems to pay for both tuition and living expenses. The study focused on public schools since they enroll 85 percent of the state’s undergrads.

It would be a pathway to debt-free students, not a “full ride.”

The concept centers on “shared responsibility.” Think of it as total college costs covered by the state after you’ve deducted parent contribution, student contribution and federal gift aid.

“The state then provides “last dollar” gift aid to meet any remaining unmet financial need,” the proposed program suggests.

Under the program, $2.2 billion would be allotted to CCC students, $800 million to CSU students and $300 million to University of California students, according to the LOA’s report. This would be in addition to existing financial aid gifted to students.

How much families contribute to their child’s college education would be calculated the same way as federal financial aid programs. Additionally, financial aid experts working on the program estimate if a student works 15 hours a week during the academic year, and 40 hours during the summer, it would allow them to contribute $7,300, after deducting living expenses.

Maddie Padilla is an English major at San Diego State University, graduating this spring with the help of financial aid. She likes the job portion of the program.

“People use financial aid for different things besides rent and stuff, and I think being required to have a job while you’re in school is a good idea. It kind of helps you balance your life and school together,” she said. “I kind of don’t understand the kids who go to college and don’t work."

The same can't be said for fellow SDSU English major Lily Staples who uses her part-time job income to help support her family.

“In the past year I’ve had to cut down on job hours so I can balance my school, job and family,” Staples said. “My money that I earn for my job goes to paying for my grandpa’s housing, and I’m not able to save it for school."

The actual program costs to the state could turn out higher or lower than estimated, but if the program were to add eligibility requirements, such as requiring a certain grade point average or 12 unit minimum, it would significantly reduce those costs, according to the LAO report.

For 2015 – 2016, average tuition for a UC school was $13,451 for a resident student taking 30 units. CSU students paid on average $6,815 in tuition while community college students paid on average $1,380, according to the study.

For living expenses, the study looked at a UC student’s expenses for the 2015-2016 year. Living on campus cost an estimated $18,716 while living off campus cost $14,691, according to the study. Those students who could live with family spent an estimated $10,209 (the study estimated $4,700 spent in rent and food).

Principal Fiscal & Policy Analyst Paul Steenhausen, who prepared the report, said the program would reduce student loan debt but would not totally eliminate it.

“There could be significant behavioral changes regarding students attending colleges and which colleges they go to, so that could affect the cost,” Steenhausen said.

He also said the state could not require students to work.

“There may be some students who choose to work fewer hours, or not work at all,” he said “For those students they may choose to take out student loans.”

The LAO also suggested taking all of the state financial aid programs available for students and families and creating just one program to help alleviate the confusion for new students and their parents.

Oregon and Minnesota currently have similar programs in place according to the study. Click here to learn more.  

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