Amended  IN  Senate  May 17, 2022
Amended  IN  Assembly  January 24, 2022
Amended  IN  Assembly  March 15, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 288

Introduced by Assembly Members Calderon and Bonta Mia Bonta
(Coauthors: Assembly Members Chiu and Santiago)
(Coauthor: Senator Limón)

January 21, 2021

An act to add Article 24 (commencing with Section 70045) to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, relating to student financial aid.


LEGISLATIVE COUNSEL'S DIGEST


AB 288, as amended, Calderon. California Ban on Scholarship Displacement Act of 2021.
Existing law establishes the California Community Colleges, under the administration of the Board of Governors of the California Community Colleges, the California State University, under the administration of the Trustees of the California State University, the University of California, under the administration of the Regents of the University of California, independent institutions of higher education, and private postsecondary educational institutions as the segments of postsecondary education in the state.
This bill would enact the California Ban on Scholarship Displacement Act of 2021, which would prohibit each public and private institution of higher education in the state that receives, or benefits from, state-funded financial assistance, or that enrolls students who receive state-funded student financial assistance, from reducing certain students’ institution-based financial gift aid offer below their financial need, except as specified. The bill would make its provisions severable.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Article 24 (commencing with Section 70045) is added to Chapter 2 of Part 42 of Division 5 of Title 3 of the Education Code, to read:
Article  24. California Ban on Scholarship Displacement Act of 2021

70045.
 This act shall be known, and may be cited, as the California Ban on Scholarship Displacement Act of 2021.

70046.
 The Legislature finds and declares both of the following:
(a) As of 2020, California students who have financial need and receive private scholarships are unable to make full use of the awards provided to them by private scholarship providers because institutions of higher education reduce their gift aid, grants, scholarships, tuition waivers, and fellowship stipends which that those students would otherwise be qualified to receive. The reduction of an institution’s financial aid due to private scholarships is referred to as “scholarship displacement.”
(b) This act is intended to ensure that private scholarships supplement, and do not supplant, gift aid, grants, scholarships, tuition waivers, and fellowship stipends provided by institutions of higher education to California students who have financial need.

70047.
 As used in this article, unless the context requires otherwise, the following definitions apply:
(a) An “academic year” is July 1 to June 30, inclusive. The start date of a session shall determine the academic year in which it is included.
(b) “Cost of attendance” means the student’s tuition and fees, books and supplies, living expenses, transportation expenses, and any other student expenses used to calculate a student’s financial need for purposes of student aid programs under Title IV of the federal Higher Education Act of 1965, as amended (20 U.S.C. Sec. 1070 et seq.).
(c) “Expected family contribution” means a student’s expected family contribution calculated according to the federal methodology pursuant to subdivision (a) of Section 69506 as established by Title IV of the federal Higher Education Act of 1965, as amended (20 U.S.C. Sec. 1070 et seq.).
(d) (1) “Financial need” means, as used in subdivision (a) of Section 70048, the cost of attendance minus the expected family contribution.
(2) “Financial need” means, as used in subdivision (b) of Section 70048, the cost of attendance minus the student aid index.
(e) “Gift aid” means all financial aid designated for the student’s educational expenses, including a grant, scholarship, tuition waiver, fellowship stipend, or other third-party payment, that is not a loan or pursuant to a work-study program.
(f) “Institutional financial gift aid” means financial gift aid that is paid for by the institution of higher education from its funds and the recipient of the aid is selected by the institution.
(g) “Institution of higher education” or “institution” means any public or private postsecondary educational institution in the state that receives, or benefits from, state-funded financial assistance or enrolls students who receive state-funded student financial assistance.
(h) “Private scholarship” means financial assistance awarded to students based on one or more factors, including, but not limited to, academic merit, talent, or a particular area of study, by a private company, foundation, or nonprofit organization, or a public charity or service group.
(i) “Scholarship displacement” means the reduction of institutional financial gift aid due to private scholarship awards.
(j) “Student” means any California resident that enrolls in any institution of higher education to obtain an undergraduate degree.
(k) “Student Aid Index” means, with respect to a student, an index that reflects an evaluation of a student’s approximate financial resources to contribute toward the student’s postsecondary education expenses for the academic year.

70048.
 (a) Commencing with the 2023–24 academic year, an institution of higher education shall not reduce the institutional financial gift aid offer of a student who is eligible to receive a federal Pell Grant award or financial assistance under the California Dream Act for an academic year as a result of private scholarship awards designated for the student unless the student’s gift aid exceeds the student’s annual cost of attendance.
(b) The institution may reduce the institutional financial gift aid offer of a student who is eligible to receive a federal Pell Grant award or financial assistance under the California Dream Act by no more than the amount of the student’s gift aid that is in excess of the student’s annual cost of attendance.
(c) The institution shall not consider receipt or anticipated receipt of private scholarships when considering a student who is eligible to receive a federal Pell Grant award or financial assistance under the California Dream Act for qualification for institutional financial gift aid.
(d) To ensure financial aid is maximized, an institution is encouraged to implement efforts to avoid scholarship displacement through consultation with scholarship providers and students to avoid situations where institutional financial gift aid and private scholarships can only be used for specific purposes.
(e) This article shall not be interpreted or implemented in a manner inconsistent with state or federal law. The provisions of this article are severable. If any provision of this article or its application is held invalid due to a conflict with federal requirements, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.