Undocumented college students in California will be eligible for state-financed loans starting next academic year, but lasting plans for the program’s budget and sustainability are still uncertain.
Senate Bill 1210, which Gov. Jerry Brown signed this week, will give undocumented students loans of up to $4,000 a year, and up to $20,000 over the course of a student’s college career. The bill is also called the California DREAM Loan Act.
Under the University of California-sponsored bill, students will have 10 years to repay the loan after they graduate, with a six-month grace period. The loan will have the same interest rate of a federal direct loan, which is 4.66 percent.
“It’s designed to level the playing field,” said UC President Janet Napolitano earlier this week. “I want to make sure students have an equivalent level of experience at the UC regardless of their status.”
The University estimates that about 1,500 students will use the program in its first year. By the 2018-2019 year and after, the number of students will grow to about 1,800, according to the California Senate’s analysis of the bill. About 2,000 undocumented students attend the UC, said University spokeswoman Dianne Klein in an email statement.
The bill’s passage marks the first time undocumented students are eligible for a government-financed loan in the United States, as undocumented students remain ineligible to receive federal student aid.
Because of this, it may be hard for the University or the state to come up with an accurate estimate of how many students will receive loans or how much money students will use, said Judy Heiman, an analyst on student financial aid for the Legislative Analyst’s Office. The Legislative Analyst’s Office provides nonpartisan policy analysis for the California Legislature.
“We don’t know anything about borrowing behavior of DREAM Loan students. We have no idea if the students will be interested in the loan,” Heiman said.
Brown has not set aside a part of the state’s budget to fund the program. While Heiman expects the state to start funding the program next year, the state may allocate a different amount of money to the program than what the Legislature intended.
Given the UC and California State University estimates, the program is expected to cost the state about $4.5 million for the 2015-2016, and $5 million annually afterward. The UC is expected to provide $3.1 million in 2015-2016 and $3.6 million annually thereafter for the fund, Klein said.
Klein said the UC and the state plan to contribute less to the fund when students begin repaying loans with interest. By 2025-2026, the program will be self-sustaining, she added.
Heiman said it may take a while for students to repay the loans, which may prolong the time period for the University and the state to continue funding the program substantially.
Daniela Ortiz-Silva, a fourth-year anthropology student and a member of a UCLA’s undocumented student group IDEAS, said the program will provide an additional avenue for students to get funding for college. IDEAS stands for Improving Dreams, Equality, Access and Success.
However, she said loans are a dangerous option for undocumented students, especially those who are granted a temporary, two-year work permit under the Deferred Action for Childhood Arrival.
“Pulling out a loan for tuition could easily land many in debt,” she said. “Our financial futures are still in the balance.”
Ortiz-Silva said she thinks that if deferred action ends after Barack Obama’s presidency, it may leave many undocumented students without the means to get a job and repay loans.
“(Without DACA), what jobs would undocumented students in California be able to obtain that would allow them to repay their loans?” Ortiz-Silva said. “None. At least not legally.”