California considers cutting financial assistance

The L.A. Times is reporting that California’s financial assistance program, which gives cash grants to low and middle-income university students, could be on the chopping block as the state faces a skyrocketing deficit.

The plan emerged in testimony by the state’s administration at a hearing today following Gov. Arnold Schwarzenegger’s  turnaround on a week-old plan to borrow $5.5 billion to help balance the state’s budget.  One nonpartisan analyst estimates the deficit at around $24 billion (USD).

Under the new proposal, 77,000 new grants costing $180 each year would be cut, but savings would eventually grow as high as $900 million as students graduate and the grants are phased out entirely.

Other programs at risk include the state’s main welfare program and health insurance for low-income families.