Between classes, activities, and friends, students may not have much time to think about what is going on outside of campus. In Washington, recent decisions made will impact students and the money they receive in loans and grants.
Since coming into effect on March 1, the sequester cuts thus far have been relatively painless for most Americans. Students may begin to see changes in the costs of loans in the 2013-2014 school year. Subsidized loans and some grants will change.
While Pell Grants should not change, the money that students receive from the Federal Supplemental Education Opportunity Grant and the Federal Work Study program will decrease.
As for Stafford loans, the fees are expected to increase. Unless Congress extends subsidized low student loan interest rates for another year, these rates are scheduled to double on July 1, from 3.4 percent to 6.8 percent, substantially increasing the cost of a college education.
The Budget Control Act of 2011 was passed by Congress in August of that year. The sequester means an automatic reduction in the fiscal budget. Congressional legislators and the White House devised the reductions and cuts. The sequester was created as a worst-case scenario if White House budget negotiators could not reach an agreement on a budget to reduce the deficit. When Democrats and Republicans could not agree on a budget, the sequester came into effect.
The automatic reductions include cuts to spending programs important to both parties, such as defense spending and social programs, including subsidized interest loans.
The United States’ debt is over a trillion dollars. On April 10, President Obama will release the fiscal 2014 budget.