Almost 50 students could lose funding
Nearly 50 fewer USC students will receive financial aid from the federal government next year under the mandatory budget cuts also known as sequestration.
Most of the cuts will affect the Federal Supplemental Educational Opportunity Grant, which gives between $100 and $4,000 to students based on financial need, but the Federal Work-Study program is also up for cuts, said Ed Miller, the director of USC’s Office of Student Financial Aid and Scholarships.
USC expects to lose 28 of the roughly 600 FSEOG awards its students get each year and 16 of approximately 650 work-study awards, Miller said.
Pell grants, the largest federal financial aid program, is immune from sequestration cuts during the first year but may not be if Congress doesn’t resolve them before a second year begins.
USC receives about $318 million in federal financial aid per year, which includes FSEOG awards, work study, Pell grants and loans.
A White House analysis estimated that 830 fewer students in South Carolina will get financial aid because of the cuts and that 270 would lose work-study jobs.
The average size of a work-study grant at USC is $3,500 per year, Miller said. He doesn’t expect awards will get smaller under sequestration.
Both programs distribute money on a first-come, first-served basis, Miller said, so it’s difficult to pinpoint how students will be affected. Once USC has distributed all of the funds it gets from the government, it turns away students — current or incoming — interested in those programs. This year, that time might come earlier.
Still, Miller said he’s not particularly worried about what will happen to those students because they’re referred to the university Career Center.
The Office of Student Financial Aid and Scholarships doesn’t keep track of students who don’t get federal aid or if they’re able to find work elsewhere, Miller said.
“I would believe that if students want to work badly enough, that we will be able to assist them or they will be able to find jobs on their own,” Miller said.
Students could also be affected by larger withholdings on federal student loans issued after July 1 to cover some of the cuts, a move that will mean big savings nationwide but might not be noticed by students, Miller said. The withholdings are known as “origination fees,” which lenders charge when a new loan is established.
“It doesn’t affect any one student all that dramatically,” he said.
But they’re more likely to feel the possible doubling of public student loan interest rates, from 3.4 percent to 6.8 percent, for loans issued after July 1.
Current students could feel the increase, Miller said, because loans are issued on a year-by-year basis.
That move isn’t associated with the budget cuts, but to prevent it will require action by Congress. The possibility also isn’t anything new — the rate hike was slated for last year until legislation pushed it back.
It concerns Miller, who said the interest rates should be more predictable and not connected to congressional action.
“You see cars advertised (with) money being loaned with no interest rate,” Miller said. “So why can you buy a car with no interest, and if you want to borrow money to pay for education from the federal government, you’re paying it?”
The issue of sequestration also affects research at USC, which depended on federal agencies to provide nearly 60 percent of the $238.3 million in grants university researchers pulled down in fiscal year 2012.
USC expects to lose about 8.4 percent, or $12.08 million, of its federal research money this year because of the budget cuts.