Higher education eyes the fiscal cliff
With the election out of the way, the returning lame-duck Congress faces a tall order of business: avoiding the devastating impact of sequestration.
The sequester, also known as the fiscal cliff,was invented as part of the debt limit law signed last year in order to get Congress to agree to lift the debt limit and avoid financial catastrophe. It was meant to deter the so-called supercommittee (the Joint Select Committee on Deficit Reduction) from not doing its job to create a plan to cut the deficit. In the absence of a plan, on Jan. 1, 2013, automatic, mandatory cuts of $1.2 trillion will kick in—half ($500 billion) from the military, half from domestic programs. These cuts will be spread over 10 years with a $110 billion reduction occurring in 2013.
Sequestration protects one-half of the military budget from cuts, as it does Social Security. But, according to a report released by the Office of Management and Budget on Sept. 17, the effect on domestic programs would be ugly.
In higher education, mandatory deep cuts to federal programs would do serious harm. Discretionary programs, which make up most of the budget, would be cut by 8.2 percent, and mandatory spending cuts would amount to 7.2 percent. The Pell Grant program and the College Access Challenge Grant program are exempt from cuts in 2013 but may face reductions in future years. Other financial aid programs likely would be hard hit.
As a result, according to the Obama administration, 1.1 million students would be dropped from the Career and Technical Education state grants program, 110,000 students from Supplemental Educational Opportunity Grants, and nearly 52,000 from Federal Work-Study benefits.
Federal college access programs, such as TRIO and GEAR UP, would also see an 8.2 percent cut. And the 1 percent origination fee for unsubsidized Stafford student loans would be raised by 7.6 percent, to about 1.1 percent of a total loan. These cuts would have the greatest impact on lower-income and at-risk students. In addition, funding for the National Science Foundation, the National Institutes of Health, and the National Endowment for the Humanities would sustain a 7.6 percent across-the-board cut to mandatory spending and an 8.2 percent cut to discretionary spending.
The AFT has been pressing Congress to agree on a balanced approach to savings and deficit reduction that includes increased revenue, and we will soon escalate this pressure by asking our members to contact their specific representatives and senators