(BCN) — The University of California is vowing to offer its California undergraduates a debt-free college experience by 2030 as part of an overhaul of how the system views college affordability.

To get there, the system of 230,000 students seeking bachelor’s degrees is relying on a mix of state and federal support, revenues from recent tuition increases, and students working part-time to cover the full cost of an education.

Students from wealthier households would also rely on parental support. The system’s governing body, the Board of Regents, took another step toward that debt-free goal Thursday by voting to prioritize part-time work over taking out loans as part of the UC’s official financial aid policy.

The change is subtle but is yet another instance of the UC signaling that its students should be able to earn a bachelor’s degree without the need to borrow within the next several years.

“The preferred outcome of our financial aid strategy is that students can afford their education through opportunities for part-time work made available to them and minimize student loan borrowing,” said Michael Brown, provost of the entire UC system, at Wednesday’s UC Regents meeting.

Though more than half of UC’s in-state undergraduate students don’t pay tuition due to financial aid, the free-college movement has widened its scope to include non-academic expenses that are still vital to a student’s education, such as housing, transportation and food.

All those expenses add up. Just over half of resident students graduate from the UC with student loans, accumulating an average of $18,800 in debt. It’s a figure that’s well below the national average but is still a financial millstone around borrowers’ necks.

A CalMatters analysis noted low-income students who receive federal aid also take out loans, at amounts ranging from $11,000 to $16,000 typically.
Earlier in the year, the UC said it would award additional aid to 6,000 low-income students this fall so the students could avoid loans.

The 2030 debt-free goal depends in large part on compliance from California’s lawmakers and the federal government.

The state Legislature and Gov. Gavin Newsom are expected to commit $632 million this year as part of a down payment on a debt-free grant that experts say will eventually cost $2.6 billion. Once fully funded, the grant is supposed to give students enough money to cover the full cost of attendance after parental support, part-time work and grant aid are considered.

Low-income students whose families cannot afford to help out with college will have to contribute about $8,000 annually to their education, which they can raise by working 15 hours a week during the school year. Where they find these jobs is an open question, but lawmakers and the governor last year launched a $500 million fund to create part-time work opportunities for low-income students attending the state’s public colleges and universities.

Students from higher-income households will also be able to avoid taking out loans, but that assumes their families will provide money toward their educations based on a federal formula. Higher-income students would also be expected to work.

There’s no timeline to fully fund the debt-free grant. However, the Senate wants to commit more money up front and fully fund the program by 2025-26 as part of the budget deal due June 15.
The new debt-free grant, which lawmakers are calling the Middle Class Scholarship 2.0, is key to UC’s debt-free goals.

That 2030 debt-free goal “is reliant on the middle class scholarship reform that the Legislature passed last year and the full funding of that,” said Seija Virtanen, associate director of state budget relations for the UC, during an Assembly budget subcommittee on education hearing this week.

For its part, the UC will divert 45% of its revenue from its recent tuition hikes toward student financial aid — up from 33%. The policy came to life last year. It’s also in UC’s compact with the governor, a de-facto deal in which Newsom is promising 5% in annual increases in education funding for the UC in exchange for key promises on affordability and student success.

Those funding increases still need legislative approval.
In an analysis conducted by UC officials last August and shared with CalMatters this week, the system projects raising an additional $333 million by 2029-30 for its undergraduate grant aid program through the tuition increases.

The current level of aid is $785 million, wrote Ryan King, a UC spokesperson, in an email.
Already UC grant aid is the second largest source of financial support for undergraduates at the system. The federal government contributed $420 million toward student grants last year. California programs, chief among them the Cal Grant that covers tuition, poured in nearly $1 billion in grant aid for students last year.

That state share will grow once the Middle Class Scholarship is officially funded. But there’s another wild card that may steer more grant aid to students.

2022 Bay City News, Inc.