Sequester cuts could hit grants

The second round of sequestration cuts could threaten the Pell Grant.

Meghan Holden

With the second round of sequestration cuts approaching in January, federal financial aid for students remains at risk.

The first across-the-board cuts last March spared some federal education aid programs, but it’s unclear how they will fare in the upcoming second wave.

With future federal student aid funding in limbo, University of Minnesota officials don’t know how they will plan for potential cuts.

The Pell Grant, the largest federal need-based grant program, was protected this school year by the Budget Control Act of 2011. But now, the grant could be included in the next sweep of federal cuts.

In 2012, nearly 12,000 University undergraduates received Pell Grants, totaling nearly $47 million in federal aid, according to Office of Institutional Research data.

Although it’s unknown what the U.S. Department of Education would do to protect Pell Grants if the second round of sequester cuts go into effect, University officials are beginning to discuss what the institution would do to prepare, said University Office of Student Finance Director Kris Wright.

“There is a degree of uncertainty,” she said.

If federal Pell Grants are reduced, students could see the effects as soon as next fall, Wright said.

But because cuts to student aid programs are contingent on decisions made by the federal government, it’s almost impossible to say just how students could be affected, she said.

For example, if the grants were cut 5 percent across the board, Wright said, students at the University could risk losing more than $3 million in federal Pell Grants.

Each student who received $5,645 from the program — the maximum amount awarded this school year — would lose nearly $300 per year.

“It certainly doesn’t rise to a point of, ‘Let’s panic and think that we’re not going to be able to work something around,’” Wright said.

The University’s work-study program could also face more federal cuts next fall.

University undergraduate students received more than $6.2 million in work-study funds in 2012, according to OIR data.

The White House estimated that about 500 fewer students in Minnesota would get work-study jobs in the 2013-14 school year due to the sequester.Research funding at the University has also suffered from the sequester.

In an Oct. 15 interview, University President Eric Kaler said the University is losing $40 to $50 million in research support this year from the cuts.

“That’s real money that impacts important work that’s being done,” he said.

The Office of the Vice President for Research is currently creating a research plan for the next five to 10 years that could help curb the effects of the budget cuts.

Because it continues to harm colleges and students across the state, Sen. Al Franken, D-Minn. — who serves on the Senate Health, Education, Labor and Pensions Committee — said he’ll push to end the sequester.

“We can cut spending and get our fiscal house in order,” he said in an email, “but we need to do it in a much smarter and more targeted way than the across-the-board cuts included in the sequester.

“I’ll continue to push to end the sequester before it does more harm to students and to colleges and universities in Minnesota and across the country.”