New fiscal cliff looms for education funding

The last-minute deal reached by members of Congress to avoid the fiscal cliff leaves federal funding for higher education in limbo.

The compromise reached last week — the American Taxpayer Relief Act of 2012 — resolved some matters, but postponed more than $1 trillion in spending cuts, known as sequestration, until the end of February.

The future of federal education funding will depend on whether sequestration comes into effect in March or if another deal is made.

Despite the uncertainty for some funding, the deal protected student aid, said Shirley Ort, associate provost and director of scholarships and student aid at UNC-CH.

“The package that they put through extended the tuition fees tax credits for families and that is worth $4,000 a year,” she said.

The act also repealed a limit that allowed students to count their student loans as tax deductible for only five years.

“It leaves unrestricted the number of months that a student could claim the interest,” she said.

Only two aid programs would be affected if sequestration went into affect — the Federal Supplemental Educational Opportunity Grants, federal grants that total up to $4,000 per student, and the Federal Work-Study Program.

She said about 60 of the 1,800 UNC-CH students with work-study would be affected by the sequestration.

The larger federal Pell grant and loan programs would be exempt from the cuts, Ort said.

“If they choose to let sequestration happen, the effect would be small (for student aid),” she said.

But for the research community across the UNC system, the so-called “fiscal cliff” is far from over.

A deal made by March would largely determine the future of UNC funding, said Christopher Brown, vice president for research and graduate education for the system.

“If the sequestration were to go into effect it would be an 8.4 percent cut in funding — it’s somewhere in the $89 million range for a reduction,” he said.

This could be a real problem for those doing research, especially graduate students, because 69 percent of research funding comes from the federal government, Brown said.

He said a looming fiscal cliff could also pose serious problems for private funding.

“Just the fact (sequestration is) out there on the horizon can depress the ability of agencies to fund research,” Brown said.

Jay Schalin, director of state policy analysis for the right-leaning Pope Center for Higher Education Policy, said sequestration is unlikely to happen and any deal would likely not affect the UNC system.

“Nobody’s introducing legislation saying, ‘Oh we’re going to cut way back on higher education,’” he said.

But for the UNC system, the future of federal funding remains in doubt as administrators await action from Capitol Hill.

“Like every aspect of the fiscal cliff, we wait,” Brown said.

Contact the desk editor at state@dailytarheel.com.