Copyright© 2005 by School Services of California, Inc.

                                      Volume 18                   For Publication Date: December 16, 2005             No. 25

Community College Transfer Students May Lose
Their Financial Aid Entitlement  

The California Student Aid Commission, which administers the state’s financial aid program for higher education students, has sent letters to 1,000 students telling them their Cal Grant award has been withdrawn because they were not residents of California when they graduated from high school. These students could have their education placed on hold or be saddled with debt because the state apparently made a mistake in awarding them financial aid.  

The affected students are largely students from community colleges who transferred to four-year higher education institutions under the California Community College Transfer Entitlement Program.  

According to Diana Fuentes-Michel, executive director of the Student Aid Commission, approximately 300 of the 1,000 students are currently enrolled in colleges and universities around the state and will lose their Cal Grants if they cannot verify that they resided in California at the time of their high school graduation. The remaining 700, who have either graduated, dropped out, or otherwise moved on, might have to repay the state, she said.  

Ms. Fuentes-Michel indicated that, unfortunately, the law is clear. The Commission must recover the money unless directed by the Governor’s Office or the Legislature to do otherwise. The questions that have been raised include: Do they want to offer forgiveness to these students? Do they want to treat these grants now like they are loans? The Commission has sent a form to the affected students asking them to verify—under penalty of perjury—whether they were state residents when they graduated from high school. They have until the end of December 2005 to respond.  

State legislators have been informed about the mistake and are now considering urgency legislation that would hold the student harmless. If such legislation is drafted, it could not be acted upon until the Legislature returns to Sacramento in January 2006. According to legislative staff, it is not the fault of the students. Research indicates that the students could not have known that residency at the time of high school graduation was required. The only place that such a requirement is spelled out is in the Education Code. Apparently the Cal Grant application forms do not stipulate residency requirements at the time of high school graduation.  

It’s unclear why the Student Aid Commission did not verify on its own whether applicants met the residency requirement. The students were California residents at the time they applied for the Cal Grants and there’s no question that they were financially needy, according to Ms. Fuentes-Michel. The Commission requires that students complete the federal Free Application for Federal Student Aid (FAFSA) when they apply and provide verification of their community college grade point average. The FAFSA does not ask if students were California residents when they graduated from high school.  

This appears to be the state’s mistake. The students should not be penalized as a result of that mistake. Hopefully the Legislature will move swiftly in January to amend the Education Code to hold these students harmless.

— Arnold Bray