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Debt-Free College? It’s Possible Says California’s “Degrees, Not Debt” Plan

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“Degrees, not debt” has become the mantra of a group of California lawmakers proposing an expanded financial aid plan for students attending California’s public colleges and universities that will not only cover tuition but for the first time, cover living expenses such as transportation and housing.

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

In the 2016-2017 school year, the College Board estimates living costs for a full-time student ranges from $11,810 on a low budget to $17,620 on a moderate spending plan. It says more than 50 percent of a student’s budget is spent on housing. In California, it is estimated that average 4-year college graduate is in $12,554 student loan debt upon graduating.

California’s Degrees Not Debt Scholarships program would be the first of its kind in the nation. It is ambitious in that other financial aid programs in Oregon and Tennessee and proposals in New York and Rhode Island only cover tuition and fees.

“There have been a lot of reports recently that California has very high costs of living, that students are struggling with food insecurity and housing insecurity,” said Darcie Harvey, senior policy analyst at the Higher Education Policy Institute. “If you go to UC Berkeley, you don’t just have to pay for UC Berkeley; you have to pay to live in Berkeley. And that’s expensive.”

California’s proposal would cost $1.6 billion annually and be phased-in over five years, starting in 2018. It aims to cover non-tuition expenses for about 400,000 students each year when fully implemented and eliminate the need for these students to borrow any money for school. The awards would be in addition to existing financial aid programs, like Pell Grants, Cal Grants and Middle Class Scholarships and be funded by the state’s general fund.

Tuition also would be waived for the first year of community college for full-time, in-state students whose parents earn less than $150,000 annually. Parents who earn more than $60,000 per year would have to contribute some money towards college, and students would have to hold part-time jobs throughout the year as part of the deal.

But even as the plan receives accolades, it’s still likely to be hard to sell, especially to Governor Jerry Brown. Brown included axing financial aid programs such as Middle Class Scholarships in his budget proposal despite record levels of student debt among Americans. The plan is also in competition with other initiatives aimed to help California’s student debtors. California politicians are toying with the idea of a state offered student loan refinancing program. Other states have already created such programs to help graduates repay student debt faster. Today, more than 44 million Americans hold a record $1.4 trillion in educational loans.

“At first blush, what’s not to like?” said H.D. Palmer, spokesman for Gov. Jerry Brown’s Finance Department. “A debt-free college education is a laudable goal. But it comes with a significant price tag and lots of questions.”

Others argue there are more pressing issues lawmakers need to confront before taking on debt-free college. For example, U.S. President Donald Trump has threatened to withhold billions of federal dollars if California refuses to cooperate with him in deporting illegal immigrants or if Obamacare is repealed, the state is feeling compelled to fill the gap to get the uninsured insurance again. If either of those happens, California may face budget constraints.

“We don’t have the money to do it. I’ll be the first to admit it,” Kevin McCarty, Democratic Assemblyman from Sacramento and chairman of the Budget Subcommittee on Education Finance, said. “But we could phase it in as money becomes available.”

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

So while debt-free college could be possible through the plan, the question still beckons, can California make it happen?

Featured photo by Images Money/CC Flickr

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