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Sequester effects will be minimal at UIndy

Posted on 03.27.2013

The University of Indianapolis will see only a minimal reduction in financial aid for the 2013-2014 academic year as a result of the federal government’s automatic spending cuts referred to as “the sequester.”

According to Director of Financial Aid Linda Handy, three aspects of financial aid will be affected: the Supplemental Educational Opportunity Grant, Federal Work Study and Stafford Loans. While those aid sources will offer slightly less aid, the Pell Grant will offer ;slightly more; the Pell Grant ceiling will be raised from $5,550 to $5,635 for eligible students.

According to Handy, recipients of the SEO grant will see a small decrease of around $23.  Handy said that UIndy will absorb the cost of the Federal Work Study shortfall and that student paychecks will not be affected. With regard to Stafford Loans, the origination fee will rise from 1 percent to 1.05 percent,  resulting in a $20 increase in fees for all incoming freshmen.

According to Handy,  individual higher education institutions have an established “pot” of money called the Conditional Guarantee fund. Because UIndy had a large Conditional Guarantee and does not receive much federal money in addition to the guarantee, students will not see much of a decrease in aid. However, schools that rely heavily on federal aid, in addition to the guarantee, may see a more dramatic decrease in aid.

Handy said that UIndy parents and students should not be concerned about the sequester having a large effect on tuition affordability.

“The sequester outcome is not critical to their [students’] ability to finance their education at UIndy,” Handy said.

According to Assistant Professor of History and Political Science Maryam Stevenson, the sequester was designed to force action on deficit reduction. The hope behind the 2011 Budget Control Act—the sequester—was to get Congress and the president to agree on deficit reduction through discretionary spending cuts and, if workable, revenue increases.

However, Stevenson said, in this polarized political climate, Congress had trouble agreeing on much of anything.

“The only thing that they [Congress] were able to do was push back the deadline,” Stevenson said. “As a result, a series of mandatory cuts were implemented.”

Stevenson pointed out that the sequester is not anything new to American politics; the sequester first appeared in the Reagan era with the Gramm-Rudman-Hollings Act, which sought to do the same thing as today’s sequester, but no real change was seen in deficit reduction legislation until the Budget Enforcement Act of 1990. The provisions of that act resulted in the prosperity and budget surpluses of the ‘90s.

However, according to Stevenson, the surpluses turned to deficits as a result of increased defense spending and tax cuts during the 2000s. The budget deficit has only grown since the Bush era, and that is why the sequester was orchestrated: to keep the deficit from getting any deeper.

According to the New America Foundation,  a nonprofit and nonpartisan public policy institute, while Pell Grants are exempted from the sequester for this fiscal year, they could be “squeezed” in the future as a result of lower spending caps that will take effect over the next 10 years, if no Congressional action is taken.

However, Handy said that there is some good news for UIndy students. Because of increases in tuition, UIndy’s financial aid packages also increase, and incoming students will see an increase in available aid despite the sequester.

“UIndy continues to add financial aid for students—both merit and need-based aid,” Handy said. “With this upcoming class, we will get a higher percentage of students’ needs met with additional university money than in the past.”


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