H-1304

AN ACT Relating to financial aid; amending RCW 28B.15.065, 28B.102.020, 28B.102.050, and 28B.101.040; adding a new chapter to Title 28B RCW; creating a new section; and making appropriations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that, of all social ills impinging upon the American family, the most persistent and most likely to contribute to other family maladies is poverty. Poverty in the United States dropped dramatically in the 1960s, then stabilized in the 1970s, but rose significantly during the 1980s. In Washington state, approximately five hundred thirty-six thousand four hundred families or eleven and two-tenths percent of the population reside in poverty. Poverty is particularly acute among single parents. Single‑parent families headed by women are six times as likely to be poor as two-parent families, and their deprivation is also more severe and enduring.

The limited educational attainment of poor parents is often shared by their children. A program targeting poor first generation college students would affect males, females, whites, African-Americans, Hispanics, young, and mature alike.

Failure to complete high school is strongly correlated with the socioeconomic status of the student's family. One of every four or five students in Washington public schools will drop out of high school.

People who achieve higher levels of educational attainment will, on average, live longer, healthier, and more productive and secure lives than will people with lesser levels of education. College graduates will attain higher social status, greater income and wealth, and will be less dependent upon government assistance.

Over the last decade, salaries for persons who were not college graduates rose thirty percent, while salaries for college graduates increased by sixty-five percent.

Very large differences exist in educational progress between students from low and high-income family backgrounds. These differences are large, pervasive, persistent, and growing. A student from a high-income family background has up to thirteen times greater chance of having a baccalaureate degree by age twenty-four than does a student from a low-income family background. The disparity in chances for earning a baccalaureate degree by age twenty-four by young adults from low and high-income family backgrounds is greater during the second half of the 1980s than it has been at any time during the last two decades.

The legislature also finds that neither student aid nor family incomes kept pace with rising college costs in the 1980s. National projections suggest that college costs will continue to rise at a minimum of six percent per year.

The nationally standardized methodology measuring a student's or family's ability to pay for college has, in recent years, required more from families in an effort to ration limited funds. Central to this assessment of family financial strength is the inflated value of home equity, causing the "working poor" and many middle-income families to be excluded from eligibility for sources of need-based financial aid for which they would have qualified over a decade ago.

The gap between jobs requiring college degrees and the graduates available to fill them is growing. Between 1992 and 2000, the United States will need to add four hundred seventy-two thousand college graduates per year to its work force, forty-two percent more than at present. Professional, technical, and management jobs will make up fifty-two percent of this decade's employment growth, requiring more and better educated baccalaureate and postbaccalaureate trained workers. Without highly skilled and trained workers, American corporations will be at a competitive disadvantage, and multinational corporations may transfer to other nations' research, product development, design, and marketing.

There exists an imbalance between grant and loan sources of aid, a reversal which occurred during the 1980s when major growth in federal student financial aid was limited to loans.

Over the course of the 1980s, the federal government's share of available student financial aid decreased from eighty-three percent to seventy-five percent, leaving the state and institutions to fill the gap. The legislature believes that this trend is likely to continue. Further, the ratio of grant-to-loan assistance shifted significantly to loans, leaving needy students in a rising spiral of debt.

Student loan defaults, most costly to the federal government, are highest among low-income, minority, and first generation college students who fail to complete their academic programs, leaving them with neither the skills nor credentials necessary for employability, nor the ability to repay the loans.

NEW SECTION. Sec. 2. The legislature finds that it has been twenty-five years since the inauguration of the federal higher education act. Despite the federal government's commitment to improving educational opportunities for individuals from low-income family backgrounds, very large differences in educational progress between students from low and high-income family backgrounds still exist. These differences are pervasive: They affect males, females, disabled individuals, part-time and full-time students, whites, African-Americans, and Hispanics alike. The commonality is low income, and a general family inability to pay the rising cost of college. These disparities are persistent because they have endured for the last two decades, although some progress has been made. The legislature also finds that now is the time for "Fulfilling the Promise: Renewing the Commitment."

NEW SECTION. Sec. 3. The Washington college promise program is established. The program shall be administered by the higher education coordinating board. Through this program, the legislature intends to reinvigorate this state's educational commitment to its citizens by ensuring that no Washington resident will be denied a college or university education due to his or her financial status.

The purposes of the program include, but are not limited to:

(1) Working toward a system of financial assistance within the state that would equalize educational opportunities for all students with academic ability and promise, regardless of family ability to pay for college;

(2) Establishing clear priorities for funding state need grant eligible students, sequentially, encompassing new populations of students as funds are available. In implementing the program, the board may follow the following priorities:

(a) Low-income and first generation college students;

(b) Students from working poor families;

(d) Students from upper middle-income families;

(3) Through a mix of state, federal, institutional, and private resources, strive for a packaging philosophy that limits student debt burden to reasonable amounts. For example, loans may comprise one-half of the student cost of attendance, with the remaining half comprised of scholarships, grants, and student employment opportunities. This packaging philosophy shall also strive to target an increasing level of work study and other self-help opportunities for upper division and middle class students, and more grant aid to lower division and low-income students;

(4) Adequately fund the state work study and state need grant programs in an effort to equalize educational opportunity, foster student choice of institutions, and minimize excessive borrowing;

(5) Authorize a simplified means test for persons whose income is equal to or less than one-half of the state's median income. This means test is intended to facilitate communication of financial aid policies and funding needs, be highly predictable, be understandable to the average citizen, and available for determining state student financial aid program eligibility;

(6) Shield all or most of a family's home equity on the family's principal place of residence and farm or business net worth in an effort to enfranchise otherwise needy students from middle-income families;

(7) Increase funding for the state need grant program to include needy graduate students;

(8) Include teachers pursuing master's degrees for continuing certification as eligible within the teachers conditional scholarship program, and increase program funding accordingly; and

(9) For at least six years, continue funding the demonstration program that permits some needy students in areas served by branch campuses to receive a grant if they choose to attend an independent college or university.

NEW SECTION. Sec. 4. In implementing the program, the board shall follow the following standards, adjusting the income standard as the state's median income changes:

Standard for Classifying Families by Income Levels

Income: 0-$19,608 $19,600-$29,500 $29,500-$49,200

Definition: Low income Working poor Middle income

Rationale: Fifty percent Fifty to Seventy-five

of state seventy-five to one hundred

median percent of twenty-five

income state median percent of state

median income

Result: Qualifies for Full need analysis Full need simplified analysis

means test required*

Priority: First priority Second priority Third priority

SNG target

population

Funding Two-thirds One-half Two-thirds

Packaging grants grants self-help

Philosophy: One-third One-half One-third grants

self-help self-help

*Full need analysis required, but allows for exclusion of home equity or business or farm net worth where state aid only is awarded. This alternative calculation is precluded by federal law where federal need-based student financial aid is awarded.

NEW SECTION. Sec. 5. The board may design and implement a demonstration project to assist needy first generation college students to obtain a baccalaureate degree. Through the program, first generation college students, as defined by the board, who are needy students as defined in RCW 28B.10.802(3), who attend an institution of higher education as defined in RCW 28B.10.802(1), and who intend to complete a baccalaureate degree within six years, may receive a conditional scholarship of up to two thousand dollars per year, for a maximum of five years. Grants awarded to any one student shall not exceed a total of ten thousand dollars. Students who do not complete a baccalaureate degree within six years incur an obligation to repay the conditional scholarship, with interest, under the conditions in section 6 of this act.

NEW SECTION. Sec. 6. (1) Participants in the first generation college student conditional scholarship demonstration program incur an obligation to repay the conditional scholarship, with interest, unless they complete a baccalaureate degree within six years, under rules adopted by the board.

(2) The terms of the repayment, including deferral of interest, shall be consistent with the terms of the federal guaranteed loan program.

(3) The period for repayment shall be ten years, with payments accruing quarterly commencing nine months from the date the participant discontinues the participant's course of study without completing a degree, unless the participant has received a temporary waiver of the six-year requirement under rules adopted by the board.

(4) The entire principal and interest of the scholarship are forgiven if the participant completes a baccalaureate degree within six years of receiving any funds under this program.

(5) The board is responsible for collection of repayments made under this section and shall exercise due diligence in such collection, maintaining all necessary records to ensure that maximum repayments are made. Collection and servicing of repayments under this section shall be pursued using the full extent of the law, including wage garnishment if necessary, and shall be performed by entities approved for such servicing by the Washington student loan guaranty association or its successor agency. The board is responsible to forgive all or part of the repayments under the criteria established in this section and shall maintain all necessary records of forgiven payments.

(6) Receipts from the payment of principal or interest or any other subsidies to which the board as administrator is entitled, that are paid by or on behalf of participants under this section, shall be deposited with the higher education coordinating board and shall be used to cover the costs of granting the conditional scholarships, maintaining necessary records, and making collections under subsection (5) of this section. The board shall maintain accurate records of these costs, and all receipts beyond those necessary to pay such costs shall be used to grant conditional scholarships to eligible students.

Sec. 7. RCW 28B.15.065 and 1977 ex.s. c 322 s 6 are each amended to read as follows:

It is the intent of the legislature that needy students not be deprived of access to higher education due to increases in educational costs or consequent increases in tuition and fees. It is the sense of the legislature that state appropriations for student financial aid be adjusted in an amount which together with funds estimated to be available in the form of basic educational opportunity grants as authorized under Section 411 of the federal Higher Education Act of 1965 as now or hereafter amended will equal ((~~twenty-four~~)) one hundred percent of any change in revenue estimated to occur as a result of revisions in tuition and fee levels under the provisions of this 1977 amendatory act.

Sec. 8. RCW 28B.102.020 and 1987 c 437 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Conditional scholarship" means a loan that is forgiven in whole or in part if the recipient renders service as a teacher in the public schools of this state.

(2) "Institution of higher education" or "institution" means a college or university in the state of Washington which is accredited by an accrediting association recognized as such by rule of the higher education coordinating board.

(3) "Board" means the higher education coordinating board.

(4) "Eligible student" means a student who is registered for at least ten credit hours or the equivalent, demonstrates achievement of at least a 3.30 grade point average for students entering an institution of higher education directly from high school or maintains at least a 3.00 grade point average or the equivalent for each academic year in an institution of higher education, is a resident student as defined by RCW 28B.15.012 through 28B.15.015, and has a declared intention to complete an approved preparation program leading to initial teacher certification or required for earning an additional endorsement, or a college or university graduate who meets the same credit hour requirements and is seeking an additional teaching endorsement or initial teacher certification. "Eligible student" also means a teacher seeking a master's degree if the degree is required for continuing certification.

(5) "Public school" means an elementary school, a middle school, junior high school, or high school within the public school system referred to in Article IX of the state Constitution.

(6) "Forgiven" or "to forgive" or "forgiveness" means to render service as a teacher at a public school in the state of Washington in lieu of monetary repayment.

(7) "Satisfied" means paid-in-full.

(8) "Participant" means an eligible student who has received a conditional scholarship under this chapter.

(9) "Targeted ethnic minority" means a group of Americans with a common ethnic or racial heritage selected by the board for program consideration due to societal concerns such as high dropout rates or low rates of college participation by members of the group.

Sec. 9. RCW 28B.102.050 and 1987 c 437 s 5 are each amended to read as follows:

The board may award conditional scholarships to eligible students from the funds appropriated to the board for this purpose, or from any private donations, or any other funds given to the board for this program. The amount of the conditional scholarship awarded an individual shall not exceed three thousand dollars per academic year. Students are eligible to receive conditional scholarships for a maximum of five years. The amount of the conditional scholarship awarded to any eligible student pursuing a master's degree for continuing certification shall not exceed: (1) The student's cost of tuition; (2) twenty-five hundred dollars per year; and (3) a total of five thousand dollars.

Sec. 10. RCW 28B.101.040 and 1990 c 288 s 6 are each amended to read as follows:

Grants may be used by eligible participants to attend any public or private college or university in the state of Washington that is accredited by an accrediting association recognized as such by rule of the higher education coordinating board and that has an existing unused capacity. Grants shall not be used to attend any branch campus or educational program established under chapter 28B.45 RCW. The participant shall not be eligible for a grant if it will be used for any programs that include religious worship, exercise, or instruction or to pursue a degree in theology. Each participating student may receive up to two thousand five hundred dollars per academic year, not to exceed the student's demonstrated financial need for the course of study.

NEW SECTION. Sec. 11. Sections 1 through 5 of this act shall constitute a new chapter in Title 28B RCW.

NEW SECTION. Sec. 12. (1) The sum of forty-six million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the general fund to the higher education coordinating board for the state need grant program.

(2) The sum of eight million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the general fund to the higher education coordinating board for the state work study program.

(3) The sum of two million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the general fund to the higher education coordinating board for the future teachers conditional scholarship program.

(4) The sum of five hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the general fund to the higher education coordinating board for the first generation conditional scholarship program.

(5) The sum of one million two hundred fifty thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 1993, from the general fund to the higher education coordinating board for endowed scholarship program matching funds.

(6) The funds appropriated in this section shall be used to pay for the higher education coordinating board's costs in administering these programs, including a fund-raising position to assist the board in raising private moneys, both matching and otherwise for any program administered by the board.