Affects of the Budget Control Act on Higher Education Financial Aid

by Jasmin Maurer, PEP Lobby Intern

Outside of my work for PEP, I also do a lot of work with an organization called Young Activists United St. Louis, which was started by PEP to engage young people in concrete social justice work.

As young people, access to a college education is something that really concerns us. I’ve spent a great deal of time discussing whether or not higher education is a right or a privilege with folks. While there is some times some debate on this question, one thing is clear, it is certainly a privilege right now.

Affordability affects accessibility, and federal funding plays a huge role in this. There are many folks who cannot attend college without the help of the government incentivizing their being there, like with Pell grants and federal loan programs.

Under the sequester cuts put in place by the Budget Control Act, higher education will face significant cuts on top of an already struggling budget. lays out exactly how those cuts will affect specific areas of federal financial aid for higher education. They include:

  • • The Office of Post-Secondary Education (OPE) will lose $186 million in funding. The OPE provides funding for TRIO, GEAR UP, Javits Fellowships, graduate assistance for areas of national need, college access challenge grants, and aid for institutional development.
    • The Office of Federal Student Aid (FSA) will lose $140 million. FSA provides funding for Federal Supplemental Educational Opportunity Grants (SEOG), Federal Work Study (FWS), LEAP, TEACH grants, and Perkins Loans
    • Stafford loans fees for new loans will increase from 1 percent to 1.1 percent.
    • PLUS loans fees for new loans will increase from 4 percent to 4.3 percent
    • Education tax benefits will expire at the end of 2012 including: the American Opportunity Tax Credit (AOTC), and the ability to use Coverdell Education Savings Accounts to pay for k-12 education expenses while higher education annual contributions will fall from $2,000 to $500.

Although the Pell Grant program would be exempt from sequester cuts right now, it would be subject to financial cuts in subsequent years. For FY2014, grant recipients could see a $310 cut from the maximum grant allotment, which would increase to $400 in FY2015.

Cutting these programs would significantly impact the lives of low-income students who rely on federal aid programs to make a college education a reality. As we move towards a more technological society where a degree is needed for more and more jobs, this is important to note. Our choice of where to put and cut funding makes it abundantly clear that educating people is not a priority.

I personally benefited from a few of the programs about to face cuts, including Federal Work Study, Perkins loans, and Stafford subsidized loans. This did not erase my debt, but they helped me avoid taking on excessive debt from private unregulated loan companies.

I was privileged to have been able to attend college. But that doesn’t seem right to me. Everyone who wishes to go to college should have the right to an education, regardless of how much money they have. Accessibility to college is a problem in this country, and the sequester cuts would make it even more of one.

So when we’re looking at where we can afford to make cuts to avoid the sequester cuts, I urge everyone to consider how these cuts will hurt students. Do we want more war machines to kill young people abroad or more educated young people at home?


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