Fiscal Cliff Threatens Student Aid
Published: Friday, December 7, 2012
Updated: Friday, December 7, 2012 02:12
The impending “fiscal cliff” for the budget deficit, which would cause a combination of automatic federal tax increases and spending cuts early next year, could compromise the availability of federally funded financial aid programs to Georgetown students.
Unless Congress can agree on a deficit-reduction deal before it adjourns Dec. 21, $55 billion will automatically be cut from domestic programs. The Office of Management and Budget projects that funding for individual programs will decrease on average by about 8.2 percent.
The Federal Work-Study program would be among the victims of these automatic spending cuts. Most need-based financial aid packages offered to Georgetown students include money from the program.
Funding for the Federal Supplemental Educational Opportunity Grant would also face automatic cuts. Georgetown uses these funds to supplement Pell Grant aid for students with the greatest financial need.
Pell Grants, while exempt from automatic tax cuts, could be affected in the next few years, according to Scott Fleming, associate vice president for federal relations.
Fleming said that Georgetown’s Office of Federal Relations’ primary strategy is to lobby Congress to reach a deal by Dec. 21 to ensure it does not invoke automatic tax cuts, also known as sequestration.
“We’re trying to do our part through my office to advocate for taking steps that will prevent sequestration because it is a very problematic approach to dealing with all of this,” Fleming said. “We have certainly been talking to congressional offices about that.”
While the spending cuts would affect aid packages for the 2013-2014 academic year, Fleming said those for next semester will remain intact.
As the fiscal cliff approaches, a deadlocked Congress has created an atmosphere of uncertainty.
“We don’t know what our allocations are, so we can’t really plan until we do,” Fleming said. “We don’t even know what the baseline is from which the 8.2 percent cut would be made because [Congress] hasn’t passed any appropriations bills.”
Even in the event of cuts to federal support for financial aid, Georgetown administrators are determined to keep Georgetown open to applicants of all financial backgrounds through its need-blind admissions policy, regardless of reductions in government funding.
“We need to be sure that talented students of any background have this chance, and if Georgetown’s where they want to be, it’s imperative upon us that we make that a possibility,” said Charles Deacon, dean of undergraduate admissions.
In times of increasing financial austerity, some colleges are revising their aid distribution policies. Wesleyan University will no longer examine all of its applicants on a need-blind basis, according to the New York Times. For its 2013 freshman class, Wesleyan will admit as many students as it can without looking at their ability to pay tuition. When its entire financial aid budget is used, however, ability to pay will factor into students’ acceptance.
According to Director of Media Relations Rachel Pugh, Georgetown will continue to review all applications on a need-blind basis.
Grinnell College in Iowa, which awards financial aid to nearly 90 percent of its students, is also considering implementing policies similar to those announced by Wesleyan. Other colleges, such as Williams and Dartmouth, have moved away from their grant-only financial aid offerings and are now requiring students to take out loans to receive their entire award. Deacon worries that these changes to financial aid policies will decrease diversity on those campuses.
“If you have fewer students on financial need, you’re going to be less socioeconomically diverse, and that usually means you’ll have less ethnic diversity,” Deacon said.
However, Deacon expressed some doubt that such a policy can remain in place forever, acknowledging that in the coming years, federal funding will play a role in determining Georgetown’s financial aid policies.
“Hopefully, as we’re going forward, we will continue to be successful in raising the kind of money for financial aid that will make that policy possible,” Deacon said. “I guess you can’t foresee the future totally, and it is a matter of funding in the long run. I think there’s going to be a lot of pressure on the government to adopt additional policies to support financial aid for students.”