College aid cuts will send parents and students scrounging
WASHINGTON (Reuters) – College students dependent on work-study programs and federal grants will have a hard time making up for reduced funding in the new school year as federal budget cuts take hold.
The so-called sequester officially kicked in on Friday, stripping millions of dollars from several financial aid programs that US colleges and universities rely on to entice students.
The biggest cuts – about $86 million – will be to the Federal Work-Study (FWS) and Supplemental Educational Opportunity Grant (FSEOG) programs, which help low-income students pay for undergraduate education, according to data from the Office of Management and Budget.
In addition, students will see a small increase in student loan origination fees, which will total $82 million. Other indirect effects could come from a $71 million cut to student aid administration funds.
Parents and students are apt to find themselves scrounging to make up for financial aid already granted but now slated to be reduced.
”Students and parents will start getting their award letters in the coming weeks, and presumably (the cuts are) just going to create more uncertainty for them,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators (NASFAA). Many schools, he said, had been notified of the association’s tentative expectations before Congress failed to beat its March 1 deadline but may have already sent out award letters.
After the cuts are implemented, Draeger said, parents and students could be forced to take out more loans at a time when student loan debt is already a growing crisis.
A report from the New York Federal Reserve Bank last week found a sharp spike in delinquent student loans.
”Financial aid administrators are frustrated, and part of the frustration comes from the empathy they feel for parents and students. There just continues to be uncertainty year after year about the funding levels and benefits that students have available to them,” said Draeger.
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