What the sequestration means for college students

Posted on March 4th, 2013

After President Barack Obama and Congress failed to reach a deal on February 28 to avoid a series of devastating spending cuts, colleges are scrambling to respond to the threat of massive reductions in funding for research and development, student financial aid, and workforce training programs.

For prospective college students, the funding cuts for work study and grants will hurt the most. According to the U.S. Department of Education, about $1.2 billion was granted to students on 713,000 campuses during fiscal year 2010-11. Due to the sequestration, however, federal officials say work-study would be cut by $49 million, eliminating 33,000 students from participation in the program. Another $100 million would be cut from programs such as the Federal Supplemental Educational Opportunity Grant, which provides aid to students with exceptional financial need. These cuts would take effect starting in the 2013-14 academic year.

Besides cuts to aid, loan origination fees will increase immediately for new loans, by about 0.05 percentage points on subsidized and unsubsidized Stafford loans, from 1 percent to 1.05 percent, and by about 0.2 percentage points, from 4 percent to 4.2 percent, on Parent PLUS and Grad PLUS loans.

While cuts vary by state, students in California, Florida, Texas, New York, and Ohio would be hit the hardest. In New York alone, 4,520 fewer students would receive financial aid, and 4,150  work study jobs would be cut.

What can students do to prepare for the worst? Seeking outside scholarships is more important than ever, as these are often privately funded and would not be affected by federal cuts. High schools, community organizations, parents’ unions, and religious organizations are a great place to start. You’d be surprised at the number of funds that go to waste from these organizations because no one applies for the scholarships. If you’re already in college, ask about major-specific scholarships within your field of study, and check to see if campus organizations offer them as well. And don’t forget online tools, such as Fastweb and CollegeNet–they’re useful for searching by specific keywords, such as region, sports, and major.

The federal cuts to student aid will make it more difficult for students with financial need to attend college, so it’s vital to do everything you can to secure outside funding. Be diligent in your search and check out our blog for more tips on searching and applying for scholarships.

Category: Financial Aid News

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