Limit Taxpayer-funded, Need-Based Financial Aid to Public and Private Nonprofit Colleges Only

Resolution Number
Assigned to
State and Legislative Issues
Status Report

This resolution establishes a position of the Senate that will be communicated with constituent groups as necessary.

Whereas, Need-based financial aid is awarded to students on the basis of financial necessity rather than academic merit;

Whereas, Historically, the vast majority of students have attended public or private nonprofit colleges, and thus need-based financial aid from taxpayer dollars was thought to be an investment in individuals for the good of society and not for the benefit of private investors;

Whereas, The expansion of aggressive marketing by for-profit colleges and universities creates a situation in which need-based financial aid is additionally used to make a profit for corporate investors directly from taxpayer dollars; and

Whereas, Many students respond to aggressive marketing by enrolling in for-profit colleges and assuming financial responsibilities, often without a clear understanding of the scope and consequences of such commitments, and default at rates that are five times as high as at California private, non-profit institutions1 and graduate at rates that are 33-43% lower than at non-profit institutions2;

Resolved, That the Academic Senate for California Community Colleges support legislation and policy directives that limit need-based financial aid packages to public and private nonprofit colleges only; and

Resolved, That the Academic Senate for California Community Colleges urge the Legislature to provide funding for access to non-profit institutions for all impacted students.

MSC Disposition: Local Senates

1The average three-year default rate for federal loan borrowers at California for-profit colleges (24.2%) is more than five times the average rate at California private nonprofit colleges (4.8%) and almost four times the rate at California public colleges (6.5%).

2 The report, “Subprime Opportunity,” by the Education Trust, found that in 2008, only 22% of the first-time, full-time bachelor’s degree students at for-profit colleges over all graduate within six years, compared with 55 % at public institutions and 65 percent at private nonprofit colleges. NY Times Ed Trust Report

Appendix B