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From my national association newletter:
How does it impact the Federal Student Aid Programs?
The Office of Management and Budget (OMB) has announced that sequestration will cut overall ED funding by $2.278 billion. For federal student aid, the Federal Supplemental Educational Opportunity Grant (FSEOG), Federal Work Study (FWS), TEACH Grant, TRIO, Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP), and Graduate Assistance in Areas of National Need (GANN) will each see an estimated 5.0 percent cut during the first year of sequestration.
Stafford Loan origination fees are expected to rise from 1.00 to 1.05 percent and PLUS origination fees to rise from 4.00 to 4.20 percent. Annual or aggregate loan limits would not be impacted.
The Pell Grant is protected from sequestration for the first year. In years 2-10, (Award Years 2014-15 though AY 2022-23) Pell will be subject to cuts as a result of sequestration.
The specific long-term impact on Department of Education (ED) contractors is unknown.
When will I know how much was cut for the student aid programs at my campus?
Hopefully soon, but it could take several weeks to find out what the new campus-based allocations under sequestration will be for your campus-based programs. Using ED's institutional-level formula elements for the 2013-14 tentative campus-based allocations, NASFAA has created a list of estimated campus-based reductions on an institutional basis for both the FWS and FSEOG programs as a result of the impending sequester.
What should I tell my students?
For schools preparing award letters for the 2013-14 award year, we advise that award letter language include clear caveats that award amounts for FWS, FSEOG, TEACH, and loan origination fees are subject to change based on federal funding.
It's always fun telling students "I don't know nuttin'" when we're waiting on the feds. It's also fun for me when loan fees change midstream. Reporting nightmare.
Just a view from this side of the sequestration. The More You Know.
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