Paying For Higher Education in California

in California

There's been a lot of news about the budget crisis in the state of California. I've been a resident of this beautiful state for over 20 years. Born on the East Coast, I went to school in Southern California at UC Santa Barbara. To say the least, it was a wonderful cultural experience for a young man, but school was inexpensive too. UCSB offered up a fantastic education, while on occasion, allowing a nice early surf session before class. Yes, sometimes dreams do come true.

But, times are changing, and the state of California is under immense pressure to cut the budget deficit and higher education will certainly be impacted. Some UC schools are backed by a somewhat healthy endowment and therefore are in better shape than others to help offset price increases for students when taking into account student aid. The combined endowments of the 10-campus UC system are about $8 billion, as of 2008, less than half of Stanford's. And while the UC Berkeley endowment is in the neighborhood of $800 million---it is dwarfed by a well known California private institution - Stanford.

Since 2001 University of California and California State University (CSU) systems have increased prices by more than 70%, even after adjusting for inflation. And, the news gets worse. In May, UC Regents increased the price of an in-state education by 9.3% and the CSU system recently implemented a 10% fee hike.

And, while private institutions across the country average roughly $40,000-50,000 for the cost of attendance (COA), some UC schools continue to close the gap.  UC Berkerley' COA is $28,000 for in-state and tops $50,000 for out-of-state students for the upcoming school year. Keep in mind, this takes into account all the variables that contribute towards COA - tuition/fees, room/board, food, transportation, personal expense.

Long gone are the days where this historic public institution, with the goal of providing a stellar education at an affordable price for state residents, is able to maintain that commitment. California budget cuts are inflicting a painful toll on the system. UC President Mark Yudof recently testified before the state's

Joint Legislative Conference Committee and stated, "Cuts of the magnitude proposed in Gov. Arnold Schwarzenegger's budget proposal will require us to consider extremely painful options. These include the possibility of further reducing first-time freshman admissions for 2010-11, revisiting the fee increase levels for 2009-10 and implementing furloughs, more layoffs and salary reductions for our employees."

And, that's not all. Gov. Schwarzenegger is also proposing reducing the number of Cal Grants which would be devastating for families. More than 46,000 UC undergraduates receive Cal Grants, which generate $293 million in grant aid for students from lower-income California families. According to the governor's proposal, the elimination of Cal Grants would save the state $173 million in the new fiscal year that begins July 1 and an additional $450 million in the following fiscal year. However, a legislative committee rejected Gov. Arnold Schwarzenegger's plan in a 6-4 party-line vote with Democrats in the majority. So, stay tuned on that front...

The reduction in student aid and fund commitments for higher education, plus fee hikes have dramatic consequences that will likely have a ripple effect in this state for years to come. I just hope California can keep it together and stay focused on what's important to maintain the 7th largest economy in the world. We need to invest in higher education through the UC, CSU and Community colleges and empower younger people to achieve great success and give back to this beautiful state.

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Mitch Gross
President, College Financial Consultants
Toll Free: 1-877-859-3243

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Paying For Higher Education in California

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This article was published on 2010/04/01