Private Colleges' Turn to Cry

In recent years, budget cuts forced California public colleges to turn away hundreds of thousands of students. This year, it's the state’s private colleges that are now fretting about the public coffers.

Private college leaders and the head of the state’s financial aid agency are worried about the reduced buying power of the publicly-financed Cal Grant. The scholarship program provides about $1.6 billion a year in aid to 394,000 Californians, including 33,000 private college students.

While the Cal Grant has remained frozen for students going to California’s four-year public colleges, where tuition fees are frozen, the maximum payout to students attending privates is decreasing. This fall, the scholarship award will fall by $1,000 to about $8,100 a year for student at a California private college.

"We think it’s devastating,” said Kristen Soares, president of the Association of Independent California Colleges and Universities.

The Cal Grant was actually created in 1955 to provide scholarships only to students who attended private colleges. The Master Plan for Higher Education in California was being debated and officials wanted to build capacity because there wasn’t enough room in the California State University or University of California systems.

Diana Fuentes-Michel, the executive director of the California Student Aid Commission, which administers the Cal Grant, said she wants to restore the value of the scholarship for private college students – but that’s a decision for the state legislature.

“We’d like to see the halting of the reduction to the independents, because we think it’s a good investment,” Fuentes-Michel, who attended a private college using the Cal Grant, said.

It’s easy to see why lawmakers would be attempting to curb its cost. The Cal Grant program cost about $460 million in 2003. Following an explosion of fee increases at the publics that the grant is required to cover and an increase in the number of low-income Californians, the program is projected to cost $1.8 billion next year, Fuentes-Michel said.

The loss of funding for privates may come as a bitter bill to some officials because their institutions have helped solve significant capacity problems for decades and perhaps particularly over the last several years.

The private colleges in California are very much affected by the interplay of the state’s three public higher ed systems. In the thumbnail version, each has become choke points for a variety of reasons: The UCs have become harder to get into – in part because of rising academic standards, in part because more students from other states or abroad are being admitted. The CSUs have bottlenecks, in part because of funding issues and because of runoff of students who couldn’t get into the UCs. And community colleges not only have had to turn away a half million students but had some would-be transfer students lingering on campus to pick up more classes because they couldn’t get into CSUs. And while all three systems are recovering now, courtesy of more generous state budgets, their advocates note that they still need much more to get back to pre-recession funding levels, and that some prefer for the public systems to be the budget priority, not Cal Grants.

While California's private non-profits have seen 24 percent enrollment growth since the beginning of the national recession, they are sometimes hesitant to paint themselves as beneficiaries of the public system’s woes.

“We saw a spike in enrollments back in 2010-11, that was probably in part due to lack of public confidence in the CSU and community college system,” said Bethami Dobkin, provost of Saint Mary's College of California, which is outside of Oakland.

While other privates may see applications receding as the publics return to better health, Saint Mary’s said it managed to keep applications, enrollment and retention up. But it’s worried about the Cal Grant funding

“The fact that there is an increased investment in higher education is good for all of us, that investment needs to happen – we would rather not seen students be penalized for choosing us,” Dobkin said.

She is not alone.

“We’re deeply concerned, we do our best to lobby our governor, himself a product of Catholic education,” said Williams Hynes, the president of Holy Names University in Oakland. “I think what we find dis-equitable is the private institutions are being hit harder than the public institutions.”

Governor Jerry Brown has backed a budget this year that will increase appropriations to all three public higher ed systems and the plan is to keep increasing funding in the near-term. Because the Cal Grant for the four-year publics is pegged to their tuition fees, that scholarship is being held flat while the grant for private students is being cut.

The Cal Grant is worth about $12,100 for students attending a UC and about $5,100 for a student going to a CSU. But privates like to use another number, prepared by the state Legislative Analyst’s Office, which shows the full state subsidy for each student. Those figures – roughly $24,000 for each UC student and about $13,000 for each CSU student – include not just the Cal Grant but funding the state provides generally to institutions’ operating budgets.

Using this figure, privates argue they are still a cheap source of capacity for California and the Cal Grant is a small price to pay.

“We would argue it’s been one of the greatest public-private partnerships” said Soares, the head of the association that represents private colleges.

(For-profit colleges, which are not represented by the association, have also seen the Cal Grant award designated for their students fall. It’s set to be $4,000 this year. The state has also taken other efforts that have denied funding to scores of low-performing privates.)

As the value of the Cal Grant has fallen for private college students, the institutions have been working to increase their financial aid packages to ensure students can both get in and stay.

“What it does is throw a greater burden on the student to borrow the money or a greater burden on us, because we are already discounting 50 percent on undergraduates,” Hynes said.

By the privates’ account, if students can’t afford to get into a private, they may end up spending more time trying to get the classes they need at a public, spending longer in college and racking up more debt.

Fuentes-Michel, the head of the state student aid agency, said parents of students with top grades still complain of seeing their students turned away from UCs.

“When they are being told 3.8 [GPA] isn’t good enough, then the independents are coming into play," she said.

The private college association is backing a bill that would create a new formula for calculating the Cal Grant award to private college students based on the size of the award to publics. A spokesman for the bill’s legislative sponsor, Assemblywoman Susan Bonilla, said the bill may be back up for discussion this summer. The CSU system has not weighed in on the bill, but would like to see changes to a need-based part of the Cal Grant program, a spokesman for system said.