Unless a deal is made to avoid the sequester scheduled for March 1, any award letter that you’ve received from your school’s financial aid office may be less than accurate. With more than $4 billion dollars on the chopping block for the Department of Education, alone, few recipients of federal aid will be unaffected. Moreover, there will simply be fewer recipients of federal aid. As I’ve noted previously, the bulk of the program dollars at risk in the current showdown are Work Study grants and Federal Supplemental Opportunity Grants (FSEOGs), the latter of which are used to aid the neediest of students.
According to the results of a survey conducted by NerdScholar, as many as 25 percent of students would delay or drop out of school if their federal aid was cut before asking parents for assistance. Of those surveyed, 85 percent are worried about the impact of the scheduled sequester on financial aid. Of course, all this is happening right before the Spring mid-term exam period. Nice. No distractions, there.
So, what should you be doing? Well, prepping, of course.
The first thing that you need to be aware of — especially you kudos-worthy early FAFSAers — is that any award letter you’ve already received could change. Yep. Just because you have it, and it’s in writing, doesn’t mean that you are locked in to the terms of the letter. You could get exactly what the letter says. You could receive less. In these uncertain times, who knows? What this means, though, is that you need to take some steps to make sure that you will be able to pay for school next year if the sequester does, in fact, occur.
As always, get your FAFSA in early (like NOW!). Many states and colleges dole out their aid dollars on a first-come, first-serve basis. If there are fewer dollars to distribute, they will run out of aid funds sooner than in previous years. So, check the aid deadlines and don’t delay. Getting your application in early could mean the difference between some aid and no aid for many students.
File your taxes early. Dependent students should also urge their parents to get their taxes filed as soon as possible. The more complete the financial information is on the FAFSA, the smoother the process will go. More importantly, it will get processed sooner, as well.
Figure out how much you can afford to pay out of your own pocket. I know you just winced in pain at the idea, but as frugal people, paying as you go is almost always a good option. Obviously, when determining your ability to contribute to your own college costs, don’t include any income you were expecting to earn from jobs funded through the work-study program. Those funds are in limbo and cannot be counted on.
In fact, there’s no reason to not try and pay for some of your college out-of-pocket. Especially of you are looking at borrowing through a private education loan program. The costs of such loans are often simply not worth the long-term interest, which is well above the prime rate, if you have the ability to pay some of the expenses yourself.
If your income or savings just isn’t where you think it needs to be, another thing to do is apply for scholarships to try and make up the shortfall. After filling out the FAFSA, you will have some idea of what your Expected Family Contribution (EFC) will be. If not, visit the College Navigator, an online tool from the National Center for Education Statistics, which can help you estimate your EFC. Once you have the number, make it your target for scholarship dollars.
If your EFC is higher than you think it should be, be prepared to shop schools. If sequestration goes into effect and your aid award is cut for the next academic year, perhaps it would be a good time to knock out some generals at a community college. Work with your school to make sure that the credits will transfer back and count toward your degree. The per-credit cost at junior or community colleges tend to be significantly lower than at four-year institutions and universities.
The fiscal cliff may be looming ahead, but some preparation and thought on your part can help you weather any negative consequences from the sequestration. And if you’re able to cover some costs without borrowing money, your education will be more valuable in the long run.