The “fiscal cliff” that will occur on January 1, 2013 if Congress fails to enact a long-term deficit reduction plan could be very difficult for college students.
In August last year, in order to avert financial catastrophe and allow the country to increase its debt limit, President Barack Obama signed the Budget Control Act of 2011. The act stipulated that if Congress didn’t produce a long term plan all sorts of cuts ($1.2 trillion over the next 10 years) to domestic spending—sequestration—would happen automatically.
For many higher education programs, the outlook isn’t good: an 8.2 percent across-the-board program cut for domestic discretionary programs, which make up most of the higher education budget, and a 7.6 percent cut for mandatory spending programs. While the Pell Grant is protected from the cuts during fiscal year 2013, as is the College Access Challenge Grant, other federal financial aid programs would be cut by 7.6 percent across the board, including the Supplemental Educational Opportunity Grant and federal work-study. Student loan origination fees would also increase.
The federal programs whose grants sustain university research — the National Science Foundation and the National Institutes of Health, as well as the National Endowment for the Humanities — would see the same across-the-board 7.6 percent cut to mandatory spending and 8.2 percent to discretionary spending. Federal college access programs, such as TRIO and GEAR UP, would also see a 8.2 percent cut.
With the exception of the research programs virtually all of the sequestration cuts in higher education will have the greatest adverse effect on America’s lower income students.
Granted, most forms of domestic federal spending will also be hurt. As the OMB report puts it:
The number of Federal Bureau of Investigation agents, Customs and Border Patrol agents, correctional officers, and federal prosecutors would be slashed. The Federal Aviation Administration’s ability to oversee and manage the Nation’s airspace and air traffic control would be reduced. The Department of Agriculture’s efforts to inspect food processing plants and prevent foodborne illnesses would be curtailed. The Environmental Protection Agency’s ability to protect the water we drink and the air we breathe would be degraded. The Federal Emergency Management Agency’s ability to respond to incidents of terrorism and other catastrophic events would be undermined. And critical housing programs and food assistance for low-income families would be cut.
It’s worth pointing out here that the cuts are merely theoretical. Congress and the president never intended to enact these cuts, which no one supports from a policy perspective. They’re merely an incentive (or threat) to force Congress to address the country’s balance sheet responsibly.
But then, it’s already September and there’s still no new budget in place.