Summer Financial Aid: A Tool for Boosting Low-Income Students’ Graduation Rates

Ensuring college students graduate from California’s public universities in a timely manner is necessary for the state to satisfy student demand for higher education and to meet the state’s workforce needs. As previously discussed in our analyses, the high cost of college attendance and overcrowded degree programs make it difficult for many low-income students to graduate on time. One way students can graduate more quickly is to enroll in summer courses. However, many low-income students miss out on summer enrollment because of insufficient financial aid. Providing low-income students with financial aid during the summer can help ensure timely graduation, which means less student loan debt, greater earning potential, and more room for the next cohort of students to start college. The 2019-20 budget includes summer-term financial aid to help some low-income students cross the graduation stage in a timely manner, but leaves others without support.

Limited Summer Financial Aid Keeps Low-Income Students Away

Students attending the state’s public four-year universities, California State University (CSU) and University of California (UC), pay for college through a combination of family contributions, earnings from work, and federal, state, and institutional aid. Many low-income students receive state and federal need-based financial aid to help pay for tuition and living expenses.

At the federal level, Pell Grants provide financial aid to low-income students to help afford the cost of college such as food and housing. The maximum Pell Grant award for 2019-20 is $6,195. In 2017, Congress reinstated the Year-Round Pell Grant, which allows students to receive a Pell Grant during the summer without drawing from their lifetime eligibility.

In California, Cal Grants are the foundation of the state’s financial aid for college students. In 2019-20 the maximum Cal Grant tuition award at CSU is $5,742 and $12,570 at UC. While Pell Grants are available for summer coursework, Cal Grants have limitations. If students take more courses during the summer it draws from their total lifetime financial aid eligibility. This means that students who wish to attend summer courses must: 1) do so without the support of Cal Grants or 2) cut into their lifetime award eligibility — leaving them without aid later in their academic careers.

As a recent Budget Center report highlighted, for students experiencing unmet basic needs, lack of financial support is a barrier to success, so receiving financial aid in the summer might allow students to continue their studies year-round and could shorten the time it takes for students to earn a degree. While a growing number of students are graduating from high school and more are attending college, completion rates at CSU and UC are low. At CSU, only 26% of students graduate in four years and 69% do so in six years. At UC, 61% of students graduate in four years and 85% graduate in six years.

For low-income students, the time it takes to earn a bachelor’s degree is often much longer because of a variety of factors, including limited availability of financial aid and other expenses of affording college. At CSU, the four- and six-year graduation rate for low-income students is 18.5% and 56.2%, respectively. Among this population, outcomes vary significantly by race and ethnicity. Black students and Latino and Hispanic students graduate at about half of the rate as their White counterparts (13.7% and 15.6%, respectively, compared to 29.3%). The CSU is working to improve graduation rates and eliminate achievement gaps through their Graduation Initiative 2025. While graduation rates are higher at UC than CSU, racial disparities still exist. Four-year graduation rates for White UC students is 70% compared to 50% for Black UC students. These racial disparities in graduation rates mimic disparities in socioeconomic status, health outcomes, and health care for people of color and reflect a legacy of discriminatory policies and practices that cut people of color off from opportunity.

Summer Financial Aid Can Help Boost Graduation Rates and Ease Capacity Limits

Summer financial aid can help more students graduate on time and ease the capacity limitations at CSU and UC.

Every year thousands of students who are qualified for admittance to the CSU and UC do not attend these colleges due to capacity limitations. These students either delay entering college, attend a private nonprofit or for-profit (often at much higher costs), or skip college completely, which disproportionately impacts low-income students who may not have the financial resources to attend a private university or who may take on staggering amounts of debt to cover the higher costs. Turning away qualified students is also counterproductive to the state’s efforts to increase the number of bachelor degrees awarded at CSU and UC in order to meet future workforce demands. To meet these needs, the CSU and UC should increase enrollment and improve graduation rates.

Limited capacity at CSU and UC also affects current students, many whom struggle to get the courses they need due to “impacted” campuses, which occurs when the number of qualified applicants is greater than the number of available spaces in a major. When programs are impacted students must wait for classes to become available, delaying their time to graduation. The sooner students graduate the sooner they can enter the workforce and free up space at a campus for another student.

California lawmakers have followed the lead of the federal Pell Grant’s extension to summer by funding some summer financial aid in the 2019-20 state budget. The budget allocates $6 million to CSU and $4 million to UC to provide summer-term financial aid to eligible students, including undocumented students. While this is a step in the right direction, the spending plan leaves behind students attending California community colleges and the state’s private institutions. Additionally, the budget notes that this funding will be suspended in two years unless General Fund revenues are higher than expected in the coming years.

Ensuring all students have access to quality public higher education is a long-standing priority of state leaders. The 2019-20 state budget builds on recent institutional efforts to help students more quickly earn a bachelor’s degree at UC and CSU. Now it’s time for the state to support these efforts by extending financial aid to summer at all of California’s colleges.