CA AB1538

Allows institutions with at least two-thirds of students receiving federal Pell grants to remain eligible for Cal Grant awards even if they exceed the 15.5% three-year cohort default rate threshold, provided their three-year average default rate meets eligibility requirements.

Allows institutions with at least two-thirds Pell grant recipients to remain eligible despite graduation rates of 30% or less, if their three-year average graduation rate meets the 30% minimum threshold.

Requires the Student Aid Commission to adopt implementing rules and regulations by March 1, 2015, and report to the Legislature by January 1, 2016, with recommendations on additional eligibility criteria including cohort size and alternative debt measures.

Maintains existing provisions that institutions with default rates of 15.5% or higher and graduation rates of 30% or lower are ineligible for Cal Grant awards starting in the 2012-13 academic year.