What happens with the anticipated failure of the Super Committee?

http://www.nasfaa.org/Advocacy/Debt-Ceiling/Impact_of_Budget_Control_Act_Across-the-Board_Reductions.aspx

The Budget Control Act was signed into law on August 2nd, 2011.  This Act increased the debt ceiling by $2.4 trillion.  How did this effect student aid programs?

1)      Elimination of in-school interest subsidy for grad and professional students (no more sub!)
2)      Additional $17 billion for Pell for FY12 and FY13
3)      Elimination of Direct Loan repayment incentives
Also created the 12 member Super Committee tasked to come up with legislation creating at least $1.2 trillion in deficit reduction by November 23rd.

Effects of sequestration (automatic spending cuts)?

http://www.nasfaa.org/Advocacy/Debt-Ceiling/Impact_of_Budget_Control_Act_Across-the-Board_Reductions.aspx

Congressional aides are reporting that forgoing any unforeseen circumstances, the Super Committee will announce TODAY their failure to reach a deficit agreement deal.  Even IF a deal is reached, the CBO (Congressional Budget Office) would have to review the legislation prior to being sent to Congress.

Nonexempt, discretionary programs would be reduced by an estimated 7.8% across the board cut according to the Congressional Budget Office.  Pell is exempt from any across the board cut.  These cuts would go into effect in FY13 – January 2013 AFTER the 2012 election process.

Funding for the U.S. Department of Education would be reduced by $3.54 billion as a result of sequestration.

SEOG, FWS, and Federal TRIO programs and GEAR UP would see a total of $221.8 million in cuts, affecting millions of students.

http://www.nasfaa.org/Advocacy/Debt-Ceiling/Automatic_Spending_Cuts_Loom_as_Deficit_Committee_Prepares_to_Dismantle.aspx

As a result of the looming Super Committee’s failure, it is likely they will dismantle the Committee and discontinue negotiations.  Any failure to meet the November 23rd deadline will revoke the power given to the Committee to “protect their-debt-reduction package from Congressional procedures to block legislation.”

Stay tuned for more on As the Financial Aid World Turns…

SASFAA Legislative Relations Committee