The bill allows immigrant students to start receiving state-funded financial aid beginning in 2013.

The new law is one of two pieces of legislation known as the California Dream Act.

The other half of the California Dream Act was signed into law in July. It allows undocumented immigrant students to receive privately funded scholarships administered at public universities and community colleges.

The only catch with the new bill is legal residents would get first dibbs. Whatever is left over, would go to illegal immigrant students.

Opponents say the bill encourages illegal immigration while supporters say children brought over by illegal immigrants should not be punished for their parents actions.

The State Department of Finance estimates that 2,500 undocumented students statewide would qualify and one percent of all Cal Grant funds would end up going to them. It estimates the new bill's costs to equal $14.5 million of a $1.4 billion program