By Caitlin D. Baron
On April 9, 2025, the Office of Administrative Law (OAL) approved the California Student Aid Commission’s (CSAC) regulation to modify how middle-class scholarship program awards are calculated. On December 27, 2024, CSAC published notice of its intent to adopt sections 30800-30803, Title 5 of the California Code of Regulations (CCR) to permanently adopt the emergency regulation that became effective on March 21, 2024, and was readopted on September 19, 2024, and December 19, 2024.
The proposed regulation is to modify the Middle Class Scholarship (MCS) Program, in accordance with SB 117 (Committee on Budget and Fiscal Review) (Chapter 50, Statutes of 2023). SB 117 made significant changes to how the MCS Program determined award amounts. According to the proposed text and the initial statement of reasons, this regulation clarifies the calculation formula based on a “cost of attendance model” which analyzes the difference in the amount of non-loan grants, scholarships, and emergency assistance a student receives and the expected student and family contributions.
The MCS Program only applies to undergraduate students in California’s public institutions: the University of California (UC) system, the California State University (CSU) system, and California Community Colleges (CCC) offering bachelor’s degrees. CSAC claims that the calculation model changes will benefit local economies while students are in school and after graduation, due to the scholarship “freeing up funds for future expenditures such as rent and mortgage payments, cars, and consumer products.” Disclosures in the proposal deny any increased local or economic costs, nor will it create or eliminate jobs or new businesses.
However, there are concerns about the program’s budget and costs, and the perceived prioritization of the MCS Program over the Cal Grant Program. For the 2024–25 school year, 100,000 more students were eligible than expected, causing a budget shortfall of more than $100 million. The UC and CSU systems have 7.1% and 5.6% tuition increases, respectively. CSAC worked with the Department of Finance and budget committees to determine how to reconcile the shortfall.
On February 27, 2025, CSAC issued Special Grant Alert 2025-10 to announce that schools will receive reimbursement for the coverage through the 2025-26 budget process without award amounts needing to be reduced. One public comment presented at the March 6, 2025, meeting drew attention to the shortfall being bridged by allocating unused funds earmarked for the Cal Grant program, which is designed for middle and low income students. The concern highlighted low income MCS recipients are receiving lower award amount than higher income students and there should be better integration between the two programs.