The latest victim of the credit crunch is the state of California in general.  Specifically: students, welfare recipients, and those who are owed tax refunds from the golden state may not be receiving any money from the government as soon as February 1, 2009.

What Happened to California?

The problem in California is one that is all too familiar across America today – the state has too much debt and its having a hard time finding anyone with money on hand who is willing to finance additional debt.  In fact, bets on whether or not California would be able to ultimately pay back its growing debt burden were, for a while, giving better odds to Mexico’s ability to pay back the money it owes before California could.

How are College Students Affected?

The LA Times reports that students could be missing out on as much as $13 million in expected college grants.  If the monetary situation in the state improves, payments may be made later.

Grant and State Financial Aid

Students expecting to receive a check from the state of California after Feb 1, 2009 should start immediately looking for another source of funds to cover that expected state payment.  Now would be a good time to apply for a few scholarships, grants, contests, or if everything else falls through – even extend student loan borrowing.


Some schools, like Los Angeles Valley College, are reducing classes to stem off the financial bloodletting.  As many as 130 classes will be canceled at this particular California college.

Housing Spiral

California has been one of the hardest hit states in the housing crisis that’s swept the USA.  Inflationary government policies, high taxes, and available cheap credit all fueled a housing boom that brought home prices in the golden state to some of the highest levels in the nation.

So how likely is it that the financial situation will truly improve and those owed money from the government can expect to be repaid?  The issue at hand can be cleared up temporarily if the governor and legislature would meet and raise the debt-ceiling, but such a solution would be temporary as it would then require that someone be found who is willing to risk their money with a loan to a state that is buried heavily in its own debt – and the private debt of its citizens, too.

High taxes on property funded a large part of California’s budget, but even when times were good and prices were high it wasn’t enough to keep the budget balanced.  Obviously, when housing prices began to crash, California was not only the leader in foreclosures, they also became a leader in lost wealth, lost tax revenue, and possibly even lost citizens.

Good Luck California Students

And by “good luck” I really mean “do everything you can to be prepared for the major shifts in funding that are likely to unfold over the next few years.”

The credit crisis is far from over – by many accounts we have not yet even reached the bottom.  Chances are that things will get worse before they get better.  Stay prepared and don’t let the economy get in the way of your college education.

  • Expect things to get worse
  • Do not rely solely on government assistance, or any single source of tuition money
  • Take advantage of free college assistance programs available through Upromise, Fastweb, ScholarshipExperts,, etc…
  • Don’t get discouraged!  Its not your fault that the economy is broken!

5 Responses to “California College Grants Hit By Cash Crunch”

  1. it’s amazing how even those who shouldn’t get affected by money (innocent children, students) are being hit badly by the financial crisis. i just hope there’s enough scholarships and student grants to help these people out

  2. i am from Africa,my country is Eritrea.i want to get schoolar ship but i don’t have money because my parents are very poor. so if u were able to accept me please help me .

  3. Imee, that is always the case. The rich only get richer and the poor.. well.. you nailed it.

  4. Any updates on this?
    Hopefully the landscape is changing for the better. I know it is better here, but don’t know about California.


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