Starting this fall, the state of California may phase out Cal Grants, a state program that provides assistance to help low-income California residents pay for college.

To offset a $5.5 billion shortfall caused by the failure of measures in the May 19 Statewide Special Election, Gov. Arnold Schwarzenegger officially proposed Tuesday to discontinue new Cal Grants for the coming academic year.

Current grant recipients would continue to receive money until they graduate. Under the proposal, grant amounts, which currently increase with student fees, would either remain steady or decrease.

The state-which is facing a total deficit of $24 billion-had originally planned to borrow the $5.5 billion from private or federal lenders, but was not eligible to receive the funds.

The projected savings of the proposed elimination are predicted to be $173 million for the 2009-10 fiscal year, and $450 million for 2010-11.

In a statement released last week, UC President Mark Yudof said the university is facing many drastic budget scenarios.

"The choices are stark, and everything is on the table," he wrote.

UC spokesperson Ricardo Vazquez said if the grants are eliminated, campuses will backfill some or all of the money students would have received, which could mean less financial aid for students who do not receive the grants.

"The impact could be very, very negative for our students," he said.

More than 7,500 UC Berkeley students received Cal Grants for the 2007-08 school year-approximately $50 million in aid, according to the California Student Aid Commission, which administers the grants.

For that year, about 53,000 UC students received the grants, adding up to about $350 million in Cal Grants for the UC system, according to the commission.

Trevor Allen, a UC Berkeley

sophomore who receives Cal Grants, said the grants enable him to pay for school on his own.

"Anything taken away ... ends up becoming a personal hardship," he said.

State officials do not yet know whether the proposal to phase out Cal Grants will affect incoming students in the fall, said H.D. Palmer, spokesperson for the state's Department of Finance.

Taking grants from students who have been awarded them may not be legal, Palmer added.

State Assemblymember Joan

Buchanan, D-Alamo, said she opposes the newly proposed cuts to higher education. She said the industries that fuel the state's economy require workers with at least an undergraduate education.

"Education is just one area where (cuts) make no sense to me," she said.

Education is only one of many areas in which the governor is proposing cuts, Palmer said

The governor has also proposed additional cuts in areas such as health care and prisons.

"The precipitous decline in state revenues has ... forced the administration to put forward proposals that would be unthinkable just a few short months ago," Palmer said.

Tags: CAL GRANTS