Education leaders, students and lawmakers will meet Nov. 17 to address a stark reality: The federal government is slashing support for higher education in unprecedented ways.
They’ll attend the California Assembly Higher Education Committee to discuss how federal budget cuts, regulations and executive orders will affect millions of current and prospective college students across California.
This isn’t business as usual. Given massive changes at the federal level, California will have to develop new strategies to ensure students can still afford to attend and complete college.
Fortunately, with smart, deliberate policy our state can still unlock higher education for thousands more students — and deliver a major boost to the economy. The key is uplifting a little-discussed group of Californians: prospective students who come from low- or middle-income households and have little or no family wealth.
These students, who we refer to as “dually-disadvantaged,” are often eager to attend college but don’t have sufficient funds or support. That’s largely because our financial aid system is designed to make income the primary factor determining state and federal aid.
Certainly income is important. But family wealth — which includes such assets as savings, investments, real estate, and business revenue — also makes a huge difference in determining whether a student can realistically afford to attend and complete college.
Nationally, 52% of dually-disadvantaged students from low-income, low-wealth households are predicted to go to college, compared to 83% of students from low-income, high-wealth households.
Among those who start college, only 20% of dually-disadvantaged students are expected to complete, compared to 59% of their similarly low-income, but higher-wealth peers.
Here in California, nearly a quarter of FAFSA filers are both low-income and low-wealth, amounting to 41,730 first-time, in-state students a year.
Wealth inequality in the state is even more extreme than income inequality, according to the Public Policy Institute of California.
The wealthiest households have a net worth estimated at $1.3 million. That’s more than 100 times higher than those near the bottom, whose net worth is about $12,000. Latino and Black households disproportionately have low wealth.
Nevertheless, the Cal Grant program does little to adjust for wealth among eligible students. Two students with the same family income are treated equally, even if one has no wealth and the other has $200,000 in assets.
California’s Middle Class Scholarship, a separate state financial aid program, has similar issues. It originally was designed to support families whose income is too high to qualify for other aid but who still need support to afford college without hefty student loans.
Since then, the program has evolved to also support low-income students. In fact, the majority of recipients come from families that make no more than $50,000 annually.
However, several aspects of the program’s latest design, including its high asset ceiling at $234,000, limit the program’s ability to target recipients from families with little to no wealth.
Better ways to help the dually-disadvantaged
Fortunately, there are several ways to address the economic needs of California’s students.
First, we can offer targeted support to dually-disadvantaged students. Following the model of the existing Students with Dependent Children Grant, the state can provide an “access award” for non-tuition costs to these students.
New research confirms just how powerful such a supplemental grant could be. An October report simulated the possible costs and benefits if California awarded an additional $5,000 grant to students who are in the bottom third of income and have no wealth. The grant would result in about 4,590 more graduates in California per cohort and a boost in state gross domestic product of $966 million — a huge return on a cost of $208 million.
Second, we can reform the middle class scholarship by better accounting for the full picture of a student’s financial resources.
If the purpose of the program is to reduce borrowing among low- and middle-class families, then we should design it to better target students who lack the income and wealth to cover college without borrowing at high rates or working excessive hours. This revision would preserve and more equitably center the middle class scholarships, aligning them with statewide goals to support an affordable higher education.
Third, lawmakers can direct additional funding to colleges and universities that disproportionately serve students who are low-wealth and low- or middle-income. And education institutions should provide more holistic support, such as transportation or housing, or better funding for highly utilized on-campus services — such as basic needs centers or student success programs.
There’s no question that federal cuts will introduce a host of new challenges for California’s higher education system. But we can still create strategies that support the students who need it most.
Emmanuel ‘Manny’ Rodriguez is Senior Director of Policy & Advocacy, California at The Institute for College Access & Success. Laura Hamilton is a professor of Sociology at the University of California, Merced and co-founder of the Higher Education, Race & the Economy (HERE) Lab
