By Wes Harlan, State Politics Reporter

A new bill advancing in the California Legislature aims to increase financial aid for students who immigrated to the country illegally and are now seeking graduate degrees, raising questions among taxpayers and watchdog groups already concerned about the state’s ballooning deficit and rising public costs.

Assembly Bill 681, introduced by Assemblymember Elhawary, would expand the California DREAM Loan Program, increasing the cap on annual and total student loans for this population. The bill would allow graduate students without legal status to borrow up to $20,500 per year and up to $138,500 in total, compared to the current cap of $4,000 annually and $40,000 total.

Supporters argue the bill makes financial aid more equitable for students who are barred from federal loans due to their immigration status. According to the University of California, graduate program costs often exceed $100,000, and current DREAM Loan limits fall far short of covering that.

But concerns are rising as California faces a multibillion-dollar budget shortfall. In May, Governor Gavin Newsom proposed freezing new Medi-Cal enrollment for undocumented adults as part of a cost-cutting measure, citing surging expenses tied to expanding public benefits.

Polling suggests the public is on board with cuts. A Napolitan News/RMG poll found that 60% of California voters oppose taxpayer-funded healthcare for immigrants living in the country illegally, and 72% say illegal immigration harms the country. A separate POLITICO-UC Berkeley poll corroborated those findings, showing that only 21% of voters support continuing full-scope Medi-Cal for this group if it means cutting other programs.

Despite this, AB 681 would open the door to expanded education funding for the same population. California Action for Legislative Accountability (CALA), a center-right advocacy organization focused on maximizing constituent impact and legislative accountability, has flagged the measure as one likely to raise concern among voters.

According to the Federation for American Immigration Reform (FAIR), California’s 3 million noncitizens who entered the country without legal permission already cost the state $25.3 billion per year, with over $14.5 billion spent on education alone. That includes $12.3 billion for K-12 schooling, $2 billion in English learner support, and $100 million-plus in in-state tuition subsidies and Cal Grants.

While no official opposition has been filed against AB 681, the vote in the Assembly was split, and the financial implications are drawing increased scrutiny.

The bill is now headed to the State Senate.