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What "going over the fiscal cliff" might mean to higher education

When funding for colleges and universities drops, campus IT budgets often take a hit as well. In the current context, any reductions in federal funds for higher education would come on top of cuts in state funding for higher education, which have already taken a toll on campus IT budgets at a number of public institutions. With these obvious points in mind, I reviewed the education funding section of a report released earlier this week by the chair of the Senate Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies. The report, Under Threat: Sequestration's Impact on Nondefense Jobs and Services, details the range of cuts by program and state that are likely to take place if the automatic reductions in federal discretionary spending approved as part of last year's debt ceiling agreement begin in January 2013 as currently scheduled. The debt ceiling agreement essentially requires $1.2 trillion in federal budget cuts over 10 years, spread equally between discretionarly spending, which includes significant parts of federal higher education spending, and defense spending, if the Congress fails to enact a deficit reduction plan of equal size.

The 2013 cuts under the agreement would total $110 billion, so discretionary programs would face a $55 billion reduction next year. How would federal higher education spending fare? The good news is that Pell Grants would be exempt from sequestration, and it looks like the student loan program would see modest if sustained increases in loan origination fees (see http://www.fas.org/sgp/crs/misc/R42050.pdf). However, the Senate report highlights other programs that would take major hits. In reviewing those impacts (see below), one should remember that these cuts represent only the beginning--additional and in many cases increasing cuts would emerge each year for the next several years if Congress took no action to stop them.

  • Federal Work Study: "Federal Work Study (FWS) programs provide funding to colleges and universities to help low- and middle-income undergraduate and graduate students pay for postsecondary education through part-time employment at their college or university, public agency, private company, or nonprofit organization. The program helps leverage additional resources for student financial aid by requiring participating institutions or employers to contribute at least 25 percent of the student’s part-time earnings. More than 680,000 students will receive FWS funding during academic year 2012-2013." A possible reduction of over $76 million would lead to approximately 52,000 fewer students able to participate in the program.
  • "TRIO Programs: TRIO programs provide competitive grants to institutions of higher education, public and private organizations, and high schools to help low-income, first generation students and students with disabilities access and complete college. They deliver a variety of services to students, including assistance in selecting and enrolling in college, tutoring, counseling and career workshops. A cut of $66 million could eliminate services to as many as 61,000 low-income students."
  • State Grants for Career and Technical Education: "State Grants for Career and Technical Education provide students in high schools, technical schools, and community colleges with core academic and employability skills as well as job-specific technical training. The program helps the United States compete in the 21st century economy by preparing students for employment in high-demand fields such as healthcare, renewable energy, science, technology, engineering, and mathematics." A possible budget cut of $88 million would reduce the number of students able to participate in the program by over 1.1 million.
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