CSU may pull cash grants to half its grad students CAL STATE

San Francisco State University grad students Hayley Leventhal (left), 25, and Arielle Smith, 25, have started an online petition to return financial aid money to graduate students. Leventhal, a graduate student of counseling at San Francisco State University, had her financial aid taken for next year taken away by the chancellor's office. less San Francisco State University grad students Hayley Leventhal (left), 25, and Arielle Smith, 25, have started an online petition to return financial aid money to graduate students. Leventhal, a graduate ... more Photo: Kevin Johnson, The Chronicle Photo: Kevin Johnson, The Chronicle Image 1 of / 3 Caption Close CSU may pull cash grants to half its grad students 1 / 3 Back to Gallery

California State University is withholding financial aid for about 20,000 needy graduate students - money that pays their tuition - pending a decision that could permanently end the cash grants, The Chronicle has learned.

Graduate students across the 23-campus system began receiving financial aid notices this week and were astonished to see that the State University Grant that takes care of tuition for low-income students was missing. In its place was the offer of a federal loan at 6.8 percent interest.

"I thought it was a mistake, that someone messed up at the financial aid office," said Hayley Leventhal, who is in the first year of a two-year master's program in counseling at San Francisco State University.

It was no mistake.

CSU Chancellor Charles Reed recently told all campuses not to allocate about $90 million in financial aid that would have paid the 2012-13 tuition for qualified grad students - about half of the roughly 40,000 graduates enrolled.

On Wednesday, campus presidents will discuss the fate of the aid program at CSU's Long Beach headquarters during their bimonthly meeting with Reed.

Cash-strapped CSU faces the possible loss of $200 million in state funding next year - on top of $750 million slashed this year - and may want to raid the financial aid program.

Nowhere to turn

Grad students are also suffering financially: They are ineligible for Cal Grants or Pell Grants, which are reserved for undergraduates. And the federal government recently ended its "subsidized loans" for graduate students, which had helped with interest payments and let them delay repaying their loans until graduation. Rising loan debt now stands at an average of $25,000 for public university graduates and has been called a ticking time bomb that may rival the subprime mortgage crisis.

CSU spokesman Mike Uhlenkamp was reluctant to explain the vanished aid as anything but a "review of current policy in regards to providing State University Grants" to grad students.

But Miles Nevin, executive director of the California State Student Association, which is located at CSU headquarters, said the permanent elimination of grants to graduate students "is being talked about openly here in the chancellor's office."

"As far as we know, it's a done deal," Nevin said. "The funds are being pulled and being placed somewhere else. We just don't know where."

He blamed lawmakers for "once again abandoning public higher education" and predicted that many graduate students will simply quit school.

A student's story

Leventhal, 25, may be one of them. Her yearly tuition is about $8,000.

"I was horrified. I started crying once I realized it was happening to everyone," said Leventhal, who received her notice Monday.

Leventhal, who hopes to become a college counselor, chose San Francisco State after talking with financial aid officers who helped estimate her cost based on grant money.

"It's a huge risk to take two years out of your working life to make this kind of commitment," she said. "I did it because I expected to receive financial assistance.

"Now I'm considering whether it's wise for me to come back next year."

She and classmate Arielle Smith, who also lost her grant, created an online petition to urge CSU not to yank the financial aid.

"Stand up to tell Chancellor Reed and the Board of Trustees that advanced degrees are not luxury goods, and that the CSU system cannot and should not sacrifice graduate students," the petition reads.

Leventhal and Smith posted the petition Wednesday night. By Friday it had more than 200 signatures.

Besides the likely loss of the grant money, what angered the students was that they received no notice or explanation.

"We felt powerless and frustrated," Leventhal said. She and Smith visited the financial aid office Tuesday to learn more, but were simply told that, yes, their grants had been cut.

"Arielle and I both took a lot of antacid after that," Leventhal said.

No other options

Diana Fuentes-Michel, executive director of the California Student Aid Commission, called the lack of an explanation "unconscionable."

"I don't believe there are any other options for these graduate students," she said.

Uhlenkamp, the CSU spokesman, said it's up to campuses to decide how and when to inform students about financial aid.

Asked why San Francisco State had sprung the news on students without explanation, Jo Volkert, associate vice president for enrollment management, told The Chronicle that the campus would e-mail an apology.