New legislation may help middle-class students qualify for financial aid

Akansha Arora took summer school and enrolled in four courses last quarter in an effort to graduate early and save money.

Her parents pay the cost of her tuition and housing. The family does not qualify for financial aid, and Arora said she will someday be responsible for paying her parents back for their expenses.

She said her financial situation leaves her fixating on each day’s cost of enrollment, rather than fully enjoying the college experience.

A new piece of legislation introduced into the California State Assembly last week, however, may allow middle-income students like Arora to qualify for aid.

The legislation applies to in-state, undergraduate students with a family income below $150,000 a year who are currently ineligible for financial aid.

The legislation is divided into two parts. The first part, Assembly Bill 1500, would change the way corporations operating in multiple states are taxed.

AB 1501, the second part of the legislation, would deposit all surplus money generated by the new corporate tax structure, which is predicted to be about $1 billion, into the California Middle Class Scholarship Plan.

Money from the plan would then be distributed to qualifying students. An estimated 3,000 to 7,000 UCLA students would benefit if the bills are passed, Ronald Johnson, director of the UCLA Financial Aid Office, said.

Coauthored by Speaker John A. Perez (D-Los Angeles), the plan, referred to as the California Middle Class Scholarship Plan, would provide about $8,200 per year for qualifying UC students. The total revenue from the legislation, as anticipated by the bill, would cover two-thirds of qualifying students’ cost of tuition.

The plan also outlines the distribution of funds to cover two-thirds of tuition for qualifying California State University students. In addition, California Community Colleges would receive a lump sum of $150 million, according to the bill.

The bill is designed for students who can’t afford to pay for college out of pocket but who are ineligible for student aid because of their income, said John Vigna, Perez’s press secretary.

Eligibility for the proposed California Middle Class Scholarship Plan would be determined by information filed under the Free Application for Federal Student Aid, Johnson said.

The bills would require a two-thirds majority vote by the legislature in order to pass, known as a supermajority.

Republicans in the state legislature have already expressed opposition to the bills. In a statement, Senate Republican Leader Bob Huff (R-Diamond Bar) characterized the plan as a distraction from other issues pressing the state.

“Let’s first enact the Governor’s pension reforms and balance the state budget, then we can better assess the need for changes in tax policy and higher education,” Huff said in the statement.

The proposed scholarship money is contingent on Perez’s plan to revise California’s corporate tax structure. Right now, businesses that operate in multiple states, including California, can use one of two methods for filing their taxes.

When filing, businesses can pay taxes to the state based solely on the sales they make in California. Alternatively, they can choose to pay taxes based on their combined sales, payroll and property.

One method amounts to less tax overall, said Kirk Stark, vice dean at the UCLA School of Law and professor of law.

Perez’s plan proposes to make the tax structure based solely on sales in California. Perez estimates the change would generate $1 billion, to be funneled directly into the California Middle Class Scholarship Plan, Vigna said.

The proposed scholarship comes several months after UC Berkeley announced its own plan to ease financial burdens on middle-income students. The Berkeley Middle Class Action Plan, effective in the 2012-2013 academic year, applies to families that make between $80,000 and $140,000 a year.

The Berkeley plan will limit qualifying families’ total required contributions to 15 percent of their total income. The scholarship will cover the remaining balance owed by students.

A decision on the Middle Class Scholarship Plan proposal will not be reached until the end of the summer. If passed, the legislation would go into effect at the beginning of the 2012-2013 academic year.

At this point, UC officials appear to be backing the plan. UC President Mark Yudof called it “constructive” in a statement last week, and Student Regent Alfredo Mireles Jr. said he hopes to see the measures pass.

“(If the bills are passed) there can finally be some economic justice for middle-class students at the UC,” Mireles said.