Financial Aid Caught in Congressional Crossfire
"The automatic spending cuts that had been scheduled to kick in on Jan. 1 included a reduction of 8.2% in federal financial aid, amounting to about $350 million. The fiscal-cliff compromise reached by Congress postponed those cuts until March 1. With many schools sending out award letters in coming weeks, experts say that will leave many parents and college-bound students uncertain about the size of their financial-aid packages—and whether the promised aid will materialize in the fall,"
MarketWatch reports. "Financial advisers have traditionally recommended that parents compare packages from different schools to determine which one had the lowest out-of-pocket costs. But experts say that makes little sense in this environment, since some colleges are assuming the spending cuts will happen, while others aren’t. If cuts are implemented, some students may find their aid is scaled back after they’ve picked a school. Experts say colleges with larger endowments or bigger tuition revenues are more likely to use those funds to make up for federal cuts. But most colleges and universities depend on the federal government for financial aid. “If Congress doesn’t come through, students and parents are going to be left in the lurch,” says Justin Draeger, president of the National Association of Student Financial Aid Administrators."