Dream Act legislation could complicate student aid picture

Sacramento native Shawn Lewis knows the value of student financial aid. The son of a struggling single mom, Lewis says he never would have been able to attend UC Berkeley without the $24,000 in annual state grants and private scholarships he receives to pursue his political science degree and dreams of law school.

But Gov. Jerry Brown is now considering whether to sign landmark legislation that would extend state financial aid to illegal immigrants who are college students. And that makes Lewis anxious.

Will the law pit illegal immigrants against U.S. citizens at a time of skyrocketing demand for student aid? Can the state afford the largesse in this bleak economy?

“The issue is not students who are undocumented through no fault of their own wanting an education,” said Lewis, president of the Berkeley College Republicans club. “The problem is that the public dollars are not there to meet the needs of even [legal] California residents.”

Such questions have mounted, along with pressures on Brown from all sides, as he prepares to act on the bill. In July, Brown signed a companion measure giving undocumented students and others who qualify for reduced in-state tuition access to private scholarships. The package of legislation is known as the California Dream Act.

Despite the passions, many financial aid experts say they expect little displacement of legal students by illegal immigrants if Brown signs the bill. Many also argue that the costs will be relatively small, but the investment will reap substantial returns for state taxpayers — who already are legally required to pay for schooling through high school regardless of students’ immigration status.

“These students have worked hard to get to college,” Diana Fuentes Michel, executive director of the California Student Aid Commission, said of undocumented students. “By not furthering their education, we’re preventing them from realizing their full potential, which will reduce state revenues in the future that supports all of our citizens.”

She said the Dream Act would not affect U.S. citizens or legal residents receiving funds from the state’s biggest pot of college financial aid, the $1.3-billion Cal-Grant entitlement program. Those grants are unlimited and given to everyone who meets the academic and low-income requirements, she said. Last year, the aid commission made available an average $4,500 grant to all 372,565 eligible applicants — an increase of more than 145,000 students in three years.

The $127-million fund for Cal-Grant competitive awards, which are limited, will almost certainly not be available to illegal immigrants. That’s because the bill prohibits undocumented students from receiving those grants before eligible U.S. citizens and legal residents are served, and at present there are 10 applicants for every award, Michel said.

A Senate committee analysis estimated the annual added cost to the Cal-Grant program at $13 million. But it is not actually known how many undocumented students will be eligible for the grants. One hurdle is the financial aid application process, which involves a federal form used for both state and federal awards that requires a Social Security or taxpayer identification number. Another potential issue for illegal immigrants is the requirement to produce evidence of income, such as tax returns. Michel said the state would need to come up with a different process for them.

“We still have barriers to overcome,” she said. “We’re going to have to look at this very carefully.”

Another source of financial aid is known as institutional grants, which are funded through student fees and awarded to low-income students by individual campuses. Campuses in the California State system, for instance, awarded more than 100,000 grants averaging $3,462 in the 2009-10 school year.

But applicants for state university grants outstrip the number of available awards, a CSU spokesman said. As a result, an undocumented student could receive one while an equally eligible U.S. citizen might not. Undocumented students also pay into the fund with their student fees.

A third stream of public aid is fee waivers for California community colleges. The colleges are believed to educate the largest number of undocumented students — one Senate committee analysis estimated the number at up to 18,000. Offering them fee waivers could cost taxpayers at least $7.6 million annually, the analysis said.

In addition, the community college system’s largest scholarship fund, which is supported by the Osher Foundation, will be newly accessible to undocumented students. In the last three years, the fund has granted more than 4,800 scholarships of $1,000 each.

University of California officials say they don’t believe the Dream Act will affect their student body much. They estimate that fewer than 500 undocumented students will be eligible to apply for public aid, and only about 80 could be eligible for private aid.

At UCLA, for example, 99% of its 135 scholarship funds, which disbursed $2.6 million to more than 1,500 students, are restricted to U.S. citizens, according to Ronald Johnson, UCLA director of financial aid. He said donors retain the right to place desired conditions on their gifts.

“We are probably talking about .00001% of all students who will be receiving this aid,” Johnson said of undocumented students. “It’s not going to have significant impact at all, and it won’t create a competitive disadvantage to students of this country.”

Likewise, UC Berkeley doesn’t expect the Dream Act to affect students’ existing aid awards because officials believe the undocumented student population is small, spokeswoman Janet Gilmore said. Only about 5% of the campus’ private scholarships are restricted to U.S. citizens or legal residents, but even so, Chancellor Robert Birgeneau recently announced a fundraising campaign earmarked for undocumented students.

As Brown considers his decision, lobbying has intensified on both sides. In the last few weeks, his office has been flooded with thousands of calls and letters urging a veto. Meanwhile, supporters have staged rallies, issued press releases and delivered more than 11,000 postcards urging Brown to sign the measure. Conservative talk radio has taken up the issue as well.

Despite assurances of limited costs, the Dream Act still worries some Californians. Loma Linda resident Marjorie Barakian said she’s “a compassionate person” but that she had to spend $40,000 of her emergency funds and sell more than $10,000 worth of heirloom silver, crystal, furniture and jewelry to pay her son’s UCLA tuition.

“It’s just unfortunate in this downturn economy that individuals are clashing over the same sources of money,” she said.

teresa.watanabe@latimes.com