The bill’s author, state Sen. Gil Cedillo, D-Los Angeles, called on the governor Wednesday to "invest in California’s future” by signing SB 160, also called the California DREAM Act, into law. Opponents say the state should not give money to lawbreakers.

While Schwarzenegger has not taken a position on the bill, he has previously shown some inclination to extend state support to the children of illegal immigrants.

The governor has supported an existing state law, passed in 2002, which now allows undocumented students in California to pay in-state tuition rates in public colleges and universities. Tuition for non-California residents is about 10 times higher.

Earlier this year, Schwarzenegger unsuccessfully tried to boost funding for health care programs for children who are here illegally. He has said that children cannot choose where they live and therefore their fate shouldn’t be politicized.

The governor declined to say whether he would apply the same reasoning to the financial aid bill.

"You have to see the way it is written,” he said at an unrelated bill-signing ceremony Wednesday. "That is why I say I have to really look at it when it comes down to my desk. Then I can address that.”

The Legislature approved SB 160 on Aug. 31, voting largely along party lines with Democrats in support. If it becomes law, undocumented students who graduate from California high schools would be eligible to compete for state financial aid. Students attending state community colleges could apply to have their fees waived.

The program could cost the state’s public college and university systems an estimated $7.3 million annually, according to legislative analysts.

"These students, among the best and the brightest young minds in our state, should not be punished for their parents’ pursuit of greater opportunities,” Cedillo said at a news conference in Los Angeles, where he was joined by representatives of civic, education, legal and immigrant groups that support the measure.

Federal legislation known as the DREAM Act, now pending in Congress and approved by the Senate in May, would go one step further: It proposes to give illegal immigrant students a chance to become legal residents, apply for federal aid and grants, and eventually become citizens.

An estimated 65,000 undocumented students graduate each year from U.S. high schools.

The state bill was slammed by the Federation for American Immigration Reform, a national group that calls for a crackdown on illegal immigration.

"We have a crumbling infrastructure, a failing educational system, a collapsing public health system,” said FAIR spokesman Ira Mehlman, "and California legislators spend most of their time dreaming up public benefits for illegal aliens.

"This rewards people who broke the law,” he said, “and punishes people who have played by the rules.”

In contrast, educators and labor and business groups in Silicon Valley and across the state have endorsed SB 160.

Hector Vega, 18, a Santa Clara University student and illegal immigrant whose story was in the Mercury News last month, said the bill “is a huge step and a good beginning” in helping resolve the uncertain lives of undocumented students. He is attending SCU on a full private scholarship funded by the Jesuits.

Eight years ago, Neidi Dominguez, 18, a sophomore at the University of California-Santa Cruz, came to the United States from Cuernavaca, Mexico. She was 10. Like Vega, Dominguez is an illegal immigrant. She’s paying for school with help from individual donors from immigrant non-profit groups in Pasadena.

"This is not an issue of giving financial aid,” Dominguez said. “It’s an opportunity to apply like everybody else.”

Rosa Perez, chancellor of San Jose-Evergreen Community College District, said the financial cost of SB 160 is small compared with the social cost of abandoning the educations of children of illegal immigrants.

"These kids, for all intents and purposes, are American kids,” Perez said. "We’ve got to help them. If we ignore them, we’ll undereducate them and they’ll remain on the margins. That’s a loss to the country.”