Mandatory federal budget cuts to education programs under the sequester will reduce the amount of financial aid that is given to University students for the upcoming 2013 to 2014 school year. However, the monetary extent of the cutbacks’ effects is unclear at this time, according to University officials.
The sequester, a series of automatic federal spending cuts was triggered on March 1 under provisions in The Budget Control Act of 2011. The act trims $1.2 trillion off the federal budget over the next nine years through funding reductions to a wide array of federal programs, including the military, low-income housing programs, and education programs, such as federal loans and grants to college students.
The most widespread reductions could be seen by the 4,400 University students that receive federal loans, but those reductions would be relatively minuscule, according to Claire Alasio, Director of Financial Aid and Associate Vice President for Enrollment Management.
Previously, federal student loans carried an origination fee of one percent of the loan’s gross value, but the fee rose to 1.05 percent for loans distributed after March 1.
“The only students impacted [were] students who did not complete their financial aid paperwork in a timely manner,” Alasio said, adding that approximately 40 students were affected by the change. “To give you a sense of the economic impact, the maximum loan for an undergraduate would be $12,500. The old fee was $125 and the new fee is $131,” she said. “As you can see, this is a minimal impact to students.”
Origination fees on Parental Loans for Undergraduate Students (PLUS) loans for parents also increased, from four percent to 4.2 percent. “This would impact about 600 students and their families,” Alasio said. “At this time, we don’t know whether the new origination fees will carry into the 2013-2014 academic year and beyond.”
To date, the increased origination fees appear to be the only concrete details of the sequester’s effects on financial aid distributed to University students. Upwards of the 1,000 University students who receive grants or participate in the federal work study programs will have to wait a little longer to find out how, if at all, their aid will be affected. Details on the cuts to these programs are still murky, and the University is waiting on more specific information from the federal government on their potential reductions.
Federal Pell Grants, need-based grants awarded to low-income students, are only protected against the sequester’s cuts for the 2012-13 academic year. “There are no guarantees past this year, but at this time we do not have a sense as to what Congress will do. Changes to this program would impact about 1,000 of Monmouth University’s students,” Alasio said. “There will be cuts to the Teacher Education Assistance for College and Higher Education (TEACH) Grant program. At this time we don’t know how much, or how, or when the cuts would be implemented. This will impact about 50 students.”
Federal opportunity grants and work study programs will be slashed by a total of 8.6 percent nationally under the sequester, but the reductions to the University’s funds for these programs is still unknown, according to Alasio. “At this time, we do not have a dollar figure impact to Monmouth University. I think there will be an impact to Monmouth University and its students, but I do not believe that the impact will be as devastating as the newspapers would have you believe.”
At least one University student echoes Alasio’s sentiments, and appears unfazed at the current uncertainty surrounding the potential to pay more out-of-pocket costs for college tuition in the coming years. “I receive financial aid. It could potentially be impacted, but I agree with the cuts,” Trevor Higginson, junior political science major, said. “The United States spends significantly more on education than any other country in the world. Despite this fact, we lag behind a number of developed nations in the subjects of math and science. Given these facts, I would say that I am okay with reasonable cuts to education spending.”
Higginson views the cuts as an essential progression towards balancing the federal budget. “The federal government increased taxes by $264 billion for 2013, budget cuts are a necessary follow-up step,” he said. “The long-term impact of the budget cuts will hinder the government’s ability to continue spending in the manner to which it has become accustomed.”
Other University students expressed some apprehension about the cuts, but declined to comment further until more concrete details about them are available.
University professor and Director of the Center for Entrepreneurship, John Buzza, said the cuts to federal education programs could end up benefiting students once they graduate and move into the workforce. Buzza believes if students have to work harder to obtain their education, they will set themselves apart from the rest of their competition in their respective career fields.
“I’m the biggest proponent in the world for education. You don’t want to have somebody to not be going to a school they got accepted to just because they don’t have the money,” he said. “But in the long run, if you have to work a little harder for it by paying more out of your pocket, or taking out another loan and paying it back upon graduation, is that a bad thing? Having to go through those extra steps teaches you something that our country is lacking: a work ethic. And if you have that type of work ethic and mentality, you can leapfrog a lot of the other people out there who don’t have it.”
Buzza said that over the years he has seen the United States become a “lazy” economy, and many students and employees don’t work up to their potential since they are used to receiving certain entitlements that may not be warranted. “I think there’s a lot of fat in our system and our industries. There are some programs out there, including education grants, which people are taking advantage of. No cuts are ever easy, but if we have the opportunity to look at the big picture and say this cut is warranted, and it does make sense, then it’s good as a whole,” he said.
