If the sequester automatic spending cuts goes into effect on March 1st, the financial aid award notification from your college may not be 100 percent accurate. The Department of Education is set to cut about $4,021 million--meaning funding for the Office of Federal Student Aid and the Office of Postsecondary Education may be slashed. These offices are responsible for distributing work-study and grant opportunities that make college possible for many students.
Out of 1,096 college students that NerdScholar interviewed on the issue of the fiscal cliff, 85 percent said they are worried about what kind of impact it would have on their aid. Twenty-five percent said they would even consider dropping out of school rather than ask their parents for help or take out private loans.
What does this mean for you? If the sequester goes into effect, the awards that colleges say they will give may not be the exact amount you will receive.
You may get what they tell you in their award letter, but due to the fiscal mess, you may get less. Still, it is helpful to be prepared to make sure you are financially covered to pay for next year's tuition. Here are five ways to deal with the uncertainty about your financial aid award in the:
1. Double check the FAFSA deadline for the state where you are applying to college. Every state has its own deadline, but you should aim to get your FAFSA submitted as soon as possible. Remind your parents to file their taxes early so you are able to input the most accurate income information. Also, early submission is key since many state- and college-aid disbursements are made on a first-come, first-serve basis.
2. Estimate what you could pay out-of-pocket. Due to the fiscal cliff, you won't know for sure how much money will be set aside for you until the talks wind down, congress makes decisions, and there is more certainty about federal education funding. After filling out the FAFSA, you will not know exactly how much you are awarded until your school sends you an award letter. However, based on the cost of attendance of your school and the knowledge of your family's income after filling out the FAFSA, you can look up your estimated out-of-pocket costs using the National Center for Education Statistic's College Navigator. Simply input your college, look up your family's income level, and you can get a rough estimate of how much you're expected to pay out of pocket. Take this number as how much money you should find in scholarships.
3. Maximize your federal aid. After filling out your FAFSA, you have your Estimated Family Contribution (EFC). Go back to the College Navigator and if your EFC does not match up with what is the suggested out-of-pocket cost, that may be an indication that school is going to give you the most aid. In other words, you can gauge how aid-friendly a school will be.
4. Be persistent and find scholarships to avoid private loans. Even after you've been admitted to your college of choice, continue looking for scholarships to try to cover your out-of-pocket costs with scholarships. Most scholarship deadlines are between January and March, so make sure to give yourself enough time to write essays, gather letters of recommendation, and put together any other application requirements.
5. Sit down and make a budget to outline your true costs of living. After receiving your financial award letter, knowing how much you are expected to pay factoring in scholarships and loans you should give you a good idea of how much money you will have to eat and pay for rent.
Although the fiscal cliff mess is making student aid more difficult to predict, you can take these steps to be extra prepared as you enter your next year in college.
Laura Pereyra is a Communications Analyst for NerdScholar, brought to you by NerdWallet, which provides free scholarship search, student loan calculator, and college comparison tools.
- Financial Aid