The Congressional supercommittee charged with cutting $1.2-trillion from the federal budget conceded defeat Monday, after its members reached an impasse over taxes and entitlement spending.
The panel's failure to produce a deficit-reduction plan triggers across-the-board cuts of roughly $1-trillion in discretionary spending over nine years, starting in the 2013 fiscal year. Unless Congress finds a way around the process, the Education Department's budget will be slashed by $3.54-billion in 2013, according to the Committee for Education Funding, an advocacy group.
While the Pell Grant program is exempt from cuts in the first year, the other student-aid programs will lose $134-million, reducing aid to at least 1.3 million students. Career, technical, and adult education will lose $136-million, affecting 1.4 million students, says the committee.
Research programs will suffer as well.
The automatic cuts—a process known as sequestration—come on top of significant reductions in education spending that have already been made this year. In April, lawmakers passed a spending bill for the remainder of the 2011 fiscal year that made steep cuts in career and technical education and college preparatory programs, and ended a policy that allowed students to receive two Pell Grants in a year.
Then, in July, lawmakers voted to end the in-school interest subsidy on federal loans to graduate students and eliminate the interest-rate reduction for on-time loan repayment for all borrowers. While most of the savings will be used to shore up the Pell Grant program, some $4.6-billion was diverted to deficit reduction.
"The student-aid programs have seen more than their fair share of cuts over the past year, and sequestration will enact yet another layer of painful cuts," said Justin Draeger, president of the National Association of Student Financial Aid Administrators.
Meanwhile, lawmakers are weighing additional cuts in student aid in 2012. In September, the chairman of the House appropriations panel that oversees education proposed tightening eligibility for Pell Grants and ending or restricting aid to minority-serving institutions. The bill, which has not yet been voted on, would also do away with two vocational-rehabilitation programs and the Fund for the Improvement of Postsecondary Education, or Fipse. Senate Democrats would make no changes to Pell eligibility, but would end the interest subsidy on undergraduate student loans during the six-month grace period after a student graduates.
The Education Department has been operating at fiscal-2011 spending levels since October 1, when the 2012 fiscal year began. It's unclear when Congress will pass a bill financing the department and the National Institutes of Health. Last week, lawmakers voted to provide slight increases for the National Science Foundation and several other science agencies through next September.