Though many effects of the federal budget cuts known as “the sequester” are unknown, they will affect federal student aid and research funding, Penn State spokeswoman Lisa Powers said.
Beginning July 1, if the cuts go into effect as they’re scheduled to today, it is estimated that Penn State will lose more than $81,000 in the federal supplemental grant program funding, Powers said. Additionally, the loan origination fee on federal student loans will increase by 1 percent, Powers said.
According to a press release from the office of Sen. Bob Casey, D-Pa., about 3,160 fewer low-income students in Pennsylvania will receive financial aid for college and about 2,290 fewer college students will get work-study jobs.
The federal support that Penn State receives from the federal government for research is between $400 million and $500 million each year, Powers said. If an eight percent cut to education takes effect, then the university could lose $30 million to $40 million or more for research, Powers said.
Penn State Vice President for Research Henry C. Foley has asked all budget executives to meet with their financial officers to consider scenarios and consequences that could arise in each particular unit, Powers said.
“Whatever happens, we will bear down and get through it,” Powers said.
On Wednesday, Casey and Sen. Pat Toomey, R-Pa., each made a different proposal on how to avoid the across-the-board cuts.
Toomey’s proposal — which he made alongside other Senate Republicans including Jim Inhofe, R-Okla., — gives President Barack Obama flexibility in implementing the $85 billion tax cuts this fiscal year.
“That’s what this bill would enable the president to do — to find the areas where we can make the cuts without causing great disruption,” Toomey said.
Casey, on the other hand, proposed $55 billion in tax cuts that would be split evenly between defense spending and ending farm subsidy direct payments. Additionally, the “Buffet Rule” would be adopted regarding taxing millionaires, ending deductions for outsourcing and closing a tax loophole for the oil industry.
“Rather than slashing programs that are critical to job growth and vital to our Communities in Pennsylvania, we need a balanced approach in the best interest of our economy,” Casey said in the release. “In order to strengthen the economy, we need to reduce the deficit in a balanced way by cutting government waste and closing tax loopholes for wealthy special-interests.”
The Associated Press contributed to this report.