Student housing is tight. Could $5 billion in loans help?

In summary

Student housing in California is already tight, and the state has big plans to expand enrollment at the University of California and California states. A $5 billion proposal would give campuses interest-free loans to expand their housing stock.

The University of California took in more students than the system officially had last fall. Yet UC leaders, lawmakers and the governor all want to dramatically increase student enrollment.

But that ambition is at odds with a housing crisis crippling UC and campuses across California.

Students will need a place to live and a new legislative plan would inject $5 billion to help campuses across the state increase their housing stock.

Assembly Bill 1602 by Assemblyman Kevin McCarty, a Democrat from Sacramento, would create a $5 billion fund that would lend money, interest-free, to public colleges and universities seeking to expand their supply of affordable housing.

That amount of money could accommodate about 21,000 more students, according to recent analyzes that show campuses spend an average of about $240,000 per student bed when building housing. But even that may not meet the total need given the number of students struggling with housing insecurity and homelessness.

The plan builds on a $2 billion Affordable Student Housing Lawmakers Grant approved last year, and signals the state’s growing commitment to addressing all costs students face in getting A degree. McCarty sees the loan program as a way to capitalize on another expected massive state budget surplus. Also, unlike financial aid programs that require annual funding, the state can help build housing once and allow a generation of students to reap the benefits, it is believed.

Campuses are struggling to fund their housing projects so they can cover operating expenses and debt repayments while remaining affordable to students, an analyst with the Office of the Legislative Analyst told lawmakers in November. Removing interest from the equation would allow campuses to pass more of the savings on to students, McCarty told CalMatters.

But the proposal faces a long road through the Legislature and currently does not define what affordable units are, other than that they should cost less than local market rates.

Program Details

Under McCarty’s plan, the University of California, California State University and, to a lesser extent, the California Community Colleges, would quickly tap into those funds, build more student housing, and then, over a period no longer than not 30, would use student rental. income to pay back what they borrowed – a zero interest revolving loan. Then the state could lend another tranche of money for student housing as the coffers of this program are replenished.

The loan would be managed by the state treasurer. Campuses could use the funds to build new structures, tear down old ones, and renovate existing dormitories. McCarty wants the bill to pass within the next few months and take effect immediately. The money would hit campuses in mid-2023 at the earliest.

“We have a college affordability crisis and we have a housing supply crisis,” McCarty said. “Those two things are really acute right now in California.”

He offered a similar revolving loan last year, but those plans have been gutted.

Consider the student housing finance craze as the third step of the college affordable bar stool that also includes:

  • California’s commitment to cover tuition for low-income students at UC, CSU, and community colleges;
  • and another large program underway to give UC and CSU extra dollars to pay for out-of-pocket expenses like housing, food, and transportation.

The promise of cheaper housing would make these new student outlays travel further.

Learn more about the lawmakers mentioned in this story

How they voted 2019-2020


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Campaign Contributions

Asm. Kevin McCarty took at least
$1.3 million
from Labor
sector since he was elected to the Legislative Assembly. This represents
of his total campaign contributions.

What is an affordable unit and who will get it?

While the proposed loan program largely builds on the original three-year, $2 billion student housing grant program approved by lawmakers last year, there are key differences.

As written, the bill does not define what affordable rent means – just that they must be below local market levels for student housing. Last year’s subsidy program, however, is more specific: It caps rent at a low level of what county median incomes are. In Los Angeles, for example, campus housing built with grant money cannot charge more than $700 per month per bed in rent in today’s dollars. Although standard university units are generally less expensive than off-campus housing, they can still cost more than $1,600 per month, UCLA and UC Berkeley reported.

The proposed loan scheme also does not specify what percentage of the money would go to higher education systems. The grant program earmarked half of all money for community colleges, 30% for California states, and 20% for UC. This caught some UC insiders off guard, given that few community colleges have a history of building student housing.

McCarty said most of the loan funds will likely go to California states and UCs, but those details could change. Another difference between the two housing programs: McCarty’s loan bill would currently allow funds to be used for faculty and staff housing.

“We have a college affordability crisis and we have a housing supply crisis.”

Assemblyman Kevin McCarty, Democrat, Sacramento

Of course, the state needs more student housing. Gov. Gavin Newsom wants to add 7,000 more UC California students by 2027 on top of the nearly 11,000 additional slots he and lawmakers approved last year. UC has its own goal of increasing enrollment by 20,000 students by 2030 — including 4,000 graduate students — though not all of these additional slots are necessarily for in-person learning.

The increase in listings and not the supply of housing “is going to be a big deal,” McCarty said.

It would also likely violate the delicate balancing act that some UC campuses have worked out with their local governments. UC Davis and UC Santa Cruz are legally required to provide housing for each new student they enroll. Meanwhile, a judge has blocked a UC Berkeley expansion, citing state environmental law.

Campuses are being built… but not enough

The system has made progress: UC campuses have added 22,000 beds over the past four years and plan to add another 20,000 beds over the next four years, a UC official told UC Regents last week. California states have added 14,000 beds in recent years.

Despite everything, the students are in the midst of a housing crisis. UC reported its housing occupancy rate was 102% of available space as of fall 2021. Many campuses had more demand for on-campus housing than beds available last fall and hundreds of students have taken to living in hotels. A third of California students struggle with unstable housing, according to a 2019 survey. Tens of thousands of students are likely experiencing homelessness.

Sometimes higher education systems can’t even fend for themselves: CalMatters uncovered a case in late 2021 in which a bureaucratic snafu could end up costing the Cal State system 3,000 beds.
UC, California states and community colleges have already proposed more than $3 billion in state-supported housing projects, far exceeding the $2 billion in housing subsidies approved by lawmakers last year. last.

The bill’s first legislative hurdle will be winning votes in the Assembly’s Higher Education Committee, likely in March.

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