This article is part of a new series focusing on the effects of the sequester on Emory. Next Week: How the sequester will affect research funding.
Emory students who receive financial aid to fund their educations might soon feel the effects of the sequester, a series of federal budget cuts that took effect March 1.
The sequester, mandated by the Budget Control Act of 2011, resulted from Congress' failure to enact legislation to reduce the federal deficit. The automatic federal budget cuts resulting from the sequester will impact funding for several financial aid programs at colleges and universities across the country, including those at Emory University.
While loan origination fees have increased, effective this month, the Federal Pell Grant Program will not be affected in the 2013-2014 academic year, according to Dean Bentley, director of the Office of Financial Aid. While funding for the Federal Work-Study Program and the Federal Supplemental Educational Opportunity Grant (FSEOG) will decrease in the fall, the University is taking measures to maintain Emory's current number of work-study offers and award amounts, Bentley wrote in an email to the Wheel.
"In terms of the largest number of students impacted, the loan origination fees are the greatest," Bentley wrote, adding that a loan origination fee essentially represents a cost to borrow. "Although the fee change is slight, thousands of students borrow loans each year."
Fees for Direct Subsidized or Direct Unsubsidized Loans increased this month to 1.05 percent from 1 percent, according to the U.S. Department of Education website.
For Direct PLUS Loans – or federal loans for graduate and professional degree students and parents of undergraduates – fees will rise to 4.2 percent from 4 percent.
Bentley specified that the fee change impacts any loans disbursed after March 1, which includes those for this summer and into the 2013-2014 academic year.
The sequester, however, will not impact the University's Pell Grant program in 2013-2014, according to Bentley, because the Budget Control Act specifically exempts the program from the effects of the automatic budget cuts.
The Pell Grant program – which provides undergraduates with funds based on financial need, school cost and their status as a part-time or full-time student – currently provides funds for 22 percent of Emory undergraduates.
And while federal funding for the FSEOG and Federal-Work Study programs would decrease by an estimated $151,000 for Emory, Bentley wrote in an email that he does not anticipate reductions in either the number of available work-study opportunities for undergraduate students or amounts awarded in 2013-2014.
He clarified, though, that Emory has not yet received the final authorization of funding levels from the Department of Education for these programs.
Bentley wrote that the University has flexibility in its Federal Work-Study Program, which would allow the school to use a small portion of its current year allocation for the next year.
"This approach could change in years beyond 2013-2014 if more severe federal reductions are experienced, or if the final allocation for 2013-2014 represents more severe reduction than projected," Bentley wrote.
In terms of the Federal Work-Study program – which pays students through part-time jobs – the $151,000 reduction would translate to approximately 55 work-study awards, Bentley wrote. The FSEOG, a limited fund grant targeted to Federal Pell Grant recipients, would lose 14 awards.
Approximately 1,600 students participated in the Federal Work-Study program in 2011-2012 and just more than 300 received an FSEOG, according to Bentley.
In addition, Bentley wrote, the University received about $2.4 million in federal funding for 2012-2013 for the Federal Work-Study program and the SEOG, and the reduction means a six-percent decrease in Emory's federal allocation.
"The uncertainty of the federal, legislative climate is not new," Bentley wrote. "As such, we have been planning appropriately by including contingencies in our budget process."
He added that the Office of Financial Aid "managed [its] work-study budget tightly this year" in anticipation of a federal reduction, though funding for beyond 2013-2014 cannot yet be predicted given the fact that the federal budget process is negotiated annually.
As for those students who borrow loans, Bentley wrote that the Office of Financial Aid will alert them of the changes and will soon post an announcement on its website.
He noted that more detailed guidance for institutions and students affected by the sequester is forthcoming.
– By Jordan Friedman
