California lawmakers announce plan to reduce student debt

California Assembly Speaker Anthony Rendon says his state is taking "the boldest step in the nation toward making college debt-free." (Photo: Office of Assembly Speaker Anthony Rendon)

In California, Assembly Democrats have proposed an extensive expansion of financial aid programs for students at the state’s public colleges and universities.

They’re calling their plan the most ambitious proposal in the country to reduce student loan debt. In addition to expanding financial aid for community college students, it would create $1.6 billion per year in new scholarships for students in the University of California (UC) and California State University (USG) systems.

The Legislative Analyst’s Office reported this year that more than half of California college students graduate with student loan debt, with debt for students from UC and CSU averaging nearly $20,000. The Democrats say their plan aims to make college more affordable so students do not need to take out loans.

“California is taking the boldest step in the nation toward making college debt-free,” said Assembly Speaker Anthony Rendon, a Democrat from Paramount. “We have the opportunity to assure California students that when they go to college, they’ll leave with degrees, not debts.”

The new scholarships would be paid for using money from the state’s general fund. The proposal would also maintain the Middle Class Scholarship program, another general fund expense. Gov. Jerry Brown, a Democrat, called for eliminating the scholarship in his budget proposal.

“We are rejecting… the governor’s cut,” Democratic Assemblyman Phil Ting, of San Francisco, said. “We think the last thing we want to do is move those families backward.”

The $1.6 billion scholarship program would be phased in over five years and would help cover non-tuition expenses for about 400,000 students each year when fully implemented. Students would begin receiving the scholarships in 2018, and they would eventually be awarded to all Cal Grant, University Grant and Middle Class Scholarship recipients.

Tackling tuition, living expenses

The Democrats’ plan would waive tuition for the first year of community college for full time, in-state students whose families make less than $150,000 a year. It would also expand the state’s financial aid program that helps cover living expenses for low-income community college students. Those expenses would be covered using money from Proposition 98, a measure that guarantees a portion of state revenue for public schools.

“I think it’s well intentioned,” Republican Assemblyman Rocky Chavez, of Oceanside, said of the Democrats’ plan. “But I don’t think it recognizes the economic reality or really addresses the challenges we have to address.”

He pointed to the state’s low four-year graduation rate — it takes many students at UCs and CSUs longer to get their bachelor’s degrees — as a more pressing problem. He said the state should work to ensure students get their degrees on time, which will in turn lower their college expenses.

Neal McCluskey, who directs the Center for Educational Freedom at the libertarian think-tank Cato Institute, said he generally opposes plans like the one California Democrats have proposed that aim to heavily subsidize education costs.

The burden of student loan debt is typically offset by the higher earnings made by college graduates, he said, and the costs of a college education should be paid for by the people receiving the education, not taxpayers.

“The more you give it away for free, the less incentive you give people to think long and hard about what they’re doing and — once they know what they’re doing — to get it finished,” McCluskey said.

College costs drew national attention during the 2016 presidential election when independent Vermont Sen. Bernie Sanders, who was vying for the Democratic nomination, proposed eliminating tuition at public colleges and universities.

This year, Democratic New York Gov. Andrew Cuomo put forward a plan to make state universities tuition-free for residents from families earning $125,000 or less per year. In Rhode Island, Gov. Gina Raimondo, also a Democrat, has proposed making two years of community college or the final two years of a four-year degree free for in-state students at public schools.

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