Learn about California IOUs and Cal Grants

Learn about California IOUs and Cal Grants

Who would have ever thought I’d say this, the City of California is now issuing IOUs. I’ll tell you how to fix you and just about anybody you know on this episode by 2Minute Finance.

So here’s the deal. The City of California is in a budget crisis and is also in a cash crisis meaning it can't pay money to everybody that it owes but as taxpayers in businesses or people like you and me. So what they’re doing they said is this past week they started issuing IOUs, slips of paper called registered warrants seen in 90 days from now.

You can get your money from the state plus interest but well that’s fine if you can wait for it but if you’re going to school and getting Cal Grants that means a completely different thing because you could be without money this coming fall.

So here’s how it breaks down. If you’re on a UC or University of California school you don’t expect your summer studies to be covered but you may not be covered in the fall. There are so many moving pieces they just don’t know what’s going to happen. If you’re in the CSU or California State University school you are in luck because the system will fund the money until the budget crisis is solved.

Now it’s unclear what will happen after the budget is funding the place because if the Governor causes the Cal Grant system everybody is out of money. So what happens if you hold that warrant right now? Well, if you're Wells Fargo or Bank America customer you have until July 10th to go and take that warrant to the bank and they will put it in your account as a deposit. After that you have to wait for the entire waiting period for your money and if you're not a customer at any one of those banks you're going to have to wait as well.

The bottom line, this IOU system is not good for anybody. You're going to have to wait for money, businesses don’t have to wait for the money and students may not be getting their grants in at fall. So we’ll just have to wait and see what happens.

For more information on resources on warrants and IOUs, visit our website at 2MinuteFinance.com. I'm Bobby Lee for 2Minute Finance.


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