California state Sen. Ricardo Lara on April 9 introduced a bill sponsored by the University of California that, if approved, would close a significant gap in the financial aid available to undocumented students who qualify for in-state tuition, but because of their immigration status, are ineligible for federal assistance.

UC President Janet Napolitano attended the Senate Education Committee to ask members to support the proposed law. It would create an educational loan program for undocumented students who graduated from a California high school and who meet other eligibility requirements under state law AB 540.

There are an estimated 2,000 undocumented undergraduates currently enrolled at UC, Napolitano said. They are more likely than other students to come from low-income families and to be the first in their families to attend college.

The loan program would give them the same access to financial resources as other students and improve their opportunities for academic success at the university, she told the committee.

"These students have worked hard to achieve their dream of a university education, and I believe we should work as hard to ensure they have every chance to succeed, including providing them with access to the same resources as their campus peers," Napolitano said.

Narrowing the financial aid gap

Under state law AB 540, undocumented students who graduated from a California high school after attending for at least three years are eligible for in-state tuition at UC and the California State University system. But they do not qualify for federal loans or Pell Grants, or for most private loans.

At UC, the resulting gap in federal aid amounts to between $5,000 and $6,000 a year.

"Unless students fill this gap by working significant additional hours for pay — to the detriment of their studies — or somehow find other outside resources, they risk having to withdraw from the university," Napolitano said.

Known formally as the California Education Access Loan Program, or the California Dream Loan Program, the bill would establish campus-based loan programs at both UC and CSU.

Each university system would be responsible for originating, servicing and collecting the loans, which would have a common interest rate and uniform repayment terms. Repaid loans would go back to an institution's pool for future loans.

The initial funding for the program would be set at $9.2 million, Lara said. He said the loan program would likely become revenue neutral and self-supporting over time, with income from the repayment of principal, interest and fees offsetting administrative costs.  

Investment in students

“We invest in California students from an early age and many of them have done what we’ve asked them to do: Work hard, study and pursue a higher education,” Lara said. “If we’re serious about strengthening our economy then we must remove obstacles for our future workforce when they’re close to the graduation finish line.  Continuing to invest in our future and ensuring that all students have access to the funding resources they need to succeed should be a top priority.”

UC and CSU would each be required to contribute $1 to the loan pool for every $3 allocated from state funds, a provision that Lara said would help guarantee that institutions administer the program responsibly and minimize defaults. UC's annual commitment is estimated at $1.6 million.

Napolitano took the helm at UC last October, and one of her first acts was to allocate $5 million in one-time funds to assist the university's undocumented students.

The funds will be used to provide staff training and develop other resources aimed at helping undocumented students navigate their specific financial situation.

In urging the committee to support the bill, Napolitano said the one-time funds were a stop-gap measure, while the bill would provide "a long-term solution."

"Through their hard work and perseverance, these students earned the opportunity to attend UC. Their accomplishments should not be disregarded, nor their future jeopardized because of their undocumented status."