Sean McMinn
smcminn@mustangdaily.net
The sequester: a scary word for some, simply confusing for others. The end of the world, maybe, or a political dance move.
Somewhere between political exaggerations and party blaming lies the truth about exactly what effect the $85 billion in federal cuts ordered earlier this month will have for Cal Poly students. But two weeks later, experts still say not much is certain.
What is the sequester?
Though the sequester was originally devised as a series of cuts so unappealing Congress would have no choice but to find a way to avoid them, it became a reality after political gridlock stalled real action.
The sequester cuts, which were split equally between defense and non-defense programs, came after Congress failed to agree on a way to cut $1.5 trillion in a span of 10 years. Republicans refused to accept a plan that included increased taxes, and Democrats said they would only agree to cut spending if it was coupled with tax increases. Neither was willing to budge.
With little movement from lawmakers near the end of February — despite pressure from President Barack Obama — Congress let its deadline pass on March 1 and triggered the sequester. Technically, Congress could still vote to replace funding in the areas cut by sequestration, but there does not appear to be a plan emerging; Republicans and Democrats are already preparing for another political battle later this month.
Despite conservative legislators’ accusations that the president exaggerated the sequester’s scope to gain political leverage, Obama criticized Republicans in the hours after Congress’ deadline passed.
“We shouldn’t be making a series of dumb, arbitrary cuts to things that businesses depend on and workers depend on, like education, and research, and infrastructure and defense,” Obama said at a White House press briefing. “It’s unnecessary. And at a time when too many Americans are still looking for work, it’s inexcusable.”
The sequester’s implications span the country’s federal programs, from airport security to military research to higher education.
Like with many other across-the-board cuts, no official announcement has been made on exactly how much funding higher-education programs will lose. But a January report by the Student Aid Alliance, a coalition of 77 organizations that support federal student aid, estimated the country’s most needy students could lose nearly $900 annually from reductions in government support.
The majority of these losses come from losses in federal work-study, which the report says could cost some students $583 per year.
What does this mean for Cal Poly students?
Because of previous decisions at Cal Poly to limit the amount of federal grants the university applies for, director of financial aid Lois Kelly said programs such as federal work-study and the low-income Supplemental Education Opportunity Grant will remain untouched. The cost to take out a loan, however, will almost certainly increase.
More than 25 percent of Cal Poly students rely on loans for themselves or their parents, Kelly said, and will see the sequester’s impact through an increase in administrative fees. As of March 1 — when Obama was forced to sign the sequester into law — fees on student loans increased from 1 percent to 1.05 percent, and fees on parent loans went from 4 percent to 4.2 percent.
“Our students will have hundreds of thousands of dollars less to spend on education,” Kelly said. “That’s less money to spend on books, housing, things like that.”
But even with the federal order to increase those fees, Kelly said the Department of Education has not yet provided Cal Poly with a framework to carry it out. Kelly said she expects hundreds of students and their parents to borrow federal money during the remainder of the academic year, but cannot assess the additional fees until the Department of Education updates administrative fees from its computers.
The Department of Education did not return a call inquiring when the fees will be assessed.
Because of the confusion with loans, Kelly said Cal Poly’s Office of Financial Aid could be contacting students who have taken out loans since March 1 in the coming weeks to inform them they will receive less money than was previously offered.
“I don’t know what the impact will be,” Kelly said. “I don’t know if they will have to pay against their loans, or renew their loans. We’re just kind of flying blind.”
During the sequester’s first year of implementation, federal Pell Grants will not be affected.
The increases in loan fees could hit students particularly hard following years of California State University tuition increases. The university system saw tuition rise nearly 250 percent during the past 10 years, and some campuses also implemented additional fees, such as Cal Poly’s Student Success Fee.
“Cuts in education, and in research in general, are counterproductive to achieving our goals and improving the nation’s economic prosperity,” CSU spokesperson Liz Chapin said. “Whether they’re flexible or across-the-board, they’d be divesting in the programs that will help our country’s economy.”
Cuts in higher education, however, might be as far as sequestration extends for Cal Poly students. Steve Hamilton, chair of the university’s economics department, said though the cuts will decrease the number of government jobs, the kinds of private-sector jobs Cal Poly graduates tend to seek won’t see as large of an impact.
“If the sequester came two years ago, I think it could have created a downward spiral,” Hamilton said. “(But) the job market will continue to improve, even with the sequester.”
Exactly how these cuts in government programs will impact the job market is still up for debate among economists, Hamilton said, but he doesn’t think it will be noticeable for students as they begin looking for employment. There is, however, confusion among experts about exactly where funding will be reduced, and who, if anyone, will benefit.
“The biggest problem is there’s not a lot of transparency of how this is going to happen,” Hamilton said of the sequester. “These are just sort of being mandated and people are trying to pencil it in after the cuts.”