Sequester: Still a Degree of Uncertainty for Higher Education

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According to College Admissions Assistance, LLC, although there is daily speculation about how sequestration will affect different domestic programs, there is much uncertainty among higher education officials.

According to College Admissions Assistance, LLC (CAA), planning ahead for an unknown circumstance is the challenge colleges and universities have been facing for months. Now that budget cuts are starting to be defined for at least this fiscal year, higher education officials are beginning to move ahead with what they know, but that information is still limited.

Even with daily speculation in the news about how sequestration will affect different domestic programs, there is much uncertainty among higher education officials. The uncertainty stems from a few factors: what does an across-the-board cut mean for education programs, which programs will be affected, how will the cuts be applied, and how will the yet-to-be-approved government spending plan affect future programs?

So, how can you plan for college without knowing how long these cuts will last or how they will affect the college-bound student? According to College Admissions Assistance (CAA), an educational-services company that provides a college planning program for high school students, the answer is to understand the facts and keep your options open.

A few facts are clear. In response to the sequester laws put in place by the Balanced Budget and Emergency Deficit Control Act of 1985, the Department of Education announced the following (

-The Pell Grant is exempt from the cuts for the 2013-2014 year.

-Campus based aid, specifically the Federal Work-Study and Federal Supplemental Educational Opportunity Grant (FSEOG) programs, is expected to be cut but official numbers have not been given.

-Loan origination fees are due to increase by a small amount. Current fees for Federal Stafford Direct Subsidized and Unsubsidized Loans are at 1 percent and will increase to 1.051 percent. Parent PLUS Loan fees will increase from 4 percent to 4.204 percent.

-For the 2013-2014 school year, individual Teacher Education Assistance for College and Higher Education (TEACH) Grants will be cut by 12.6 percent and individual Iraq-Afghanistan Service Grants will be cut by 37.8 percent.

Some universities will be affected more than others depending on how much they rely on government funding. Colleges may choose to use their own institutional funding to make up for any federal shortages or “tighten their belts” in other areas. Clif Smart, president of Missouri State University said in the March 19, 2013 edition of The Standard, “We have reserves to weather any short term loss of funding, so we should be fine this year.”

So, the question now is how do you plan for college when so much is still uncertain?

CAA advises all students to apply to at least four colleges with at least one in-state public institution as their “financial safety” school.

“The concept of finding at least one ‘financial safety’ school has never been more important, but to do that, parents need a basic understanding of how financial aid works and how it is awarded,” said Brenda Watkins, Executive Director of Student Services for CAA. “Parents can sabotage their own efforts to get the best award possible by having their student apply to only one college or applying to colleges without determining the proper fit on an academic, social, emotional, and financial level.”

Watkins explains that students who fit on all four levels are much more attractive candidates, which may translate into higher institutional funding. However, she said those who applied to colleges without regard to “fit” still have options.

For students who did not have access to this type of information, Watkins advises they carefully review all award notifications as they arrive and apply to additional colleges that are still accepting applications, as needed. CAA advises students and parents to consider the four-year cost of the colleges along with any financing options.

“Exhaust all federal loan options before considering risky alternatives such as private loans, home equity loans, or borrowing from retirement plans,” said Watkins. “Borrowing from your retirement plan in this volatile economy is unwise because you lose tax benefits, earnings, and face stiff penalties if you cannot repay the debt within five years.” (

Yes college is expensive, but it is still one of the best investments you can make. According to the Hamilton Project by the Brookings Institution, ( today’s college graduates see a 75 percent increase in lifetime earnings and a surprising 20 percent increase in employment over high school graduates.

The silver lining for high school underclassmen is they have plenty of time to research careers and find colleges based on fit to position themselves for a successful future. This is good advice, sequester or not.

About the Company:
College Admissions Assistance is a comprehensive college-planning service that has helped thousands of students prepare themselves for college--from discovering a great career, achieving admission to the right college, and enjoying the best financial start in life. The company's ultimate mission is to help each student live out their unique purpose in life by helping them get started with the right college education.

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