Nation's fiscal situation could affect financial aid
Published: Wednesday, February 6, 2013
Updated: Wednesday, February 6, 2013 13:02
Many Americans alternated between holding their breath and beating their heads against a wall during the weeks leading up to the fiscal cliff situation. The coming months will allow the government more time to evaluate and adjust the fiscal situation.
The possible upcoming decisions of the government affect college students in one specific way—changes to financial aid.
It should be noted that some aspects of financial aid will remain the same. For example, according a “US News and World Report” article titled “Prepare for Financial Aid Changes in 2013” by Kathy Hopkins, the original tax system that was set to expire has been extended through 2017. This means that families are able to claim $2,500 to help cover college expenses.
Also, according to the article, the Tuition and Fees Deduction has been renewed, allowing students or those under whom they are dependents to deduct up to $4,000 in qualifying expenses on their tax returns.
Both of these programs are good news for any broke college student.
However, the rest of the financial aid programs available to students are waiting for renewal by Congress, which will have to be passed by March 1. Any funding not renewed or approved may end up disappearing.
“Congress has got to act for (the Financial Aid Department) to be able to know if there’s going to be any affect on our students at all,” Associate Director of Financial Aid Gary Bateman said.
In the meantime, Ottawa University and other colleges are sending out award letters telling students how much financial aid they are eligible to receive, with a disclaimer that some of the aid could disappear if Congress fails to act.
According to Bateman, OU will award student financial aid based on the tentative funding levels they have received. The Financial Aid Department cannot wait for Congress to establish next year’s financial funding before they award aid to students.
“We’ve got to proceed with what we’ve got to do here,” he said.
Bateman explained that there are several areas that may face financial cuts. One is the work-study program. He also added that after July 1 any new subsidized loans will have an interest rate of 6.8 percent, rather than the current rate of 3.4 percent.
Initially, college students may not face the financial trouble relating to the interest rate increase, but they are in for a harsh reality when they graduate from college and begin to pay down their debt.
If work study funding were to be taken away, the funding for the SEOG Grant, as well as the Perkins Loan would be decreased or withdrawn.
Although there is no way of knowing what the government will do in regards to financial aid, the Financial Aid Department strongly suggests students file their Free Application for Federal Student Aid (FAFSA) before March 15 to receive priority in on-campus scholarships.