What Now?

WASHINGTON -- With a few terse paragraphs Monday evening, the Congressional “super committee” on deficit reduction announced that it could not reach an agreement, setting the stage for $1.2 trillion in sweeping automatic spending cuts over the next decade if Congress does not act by 2013 to compromise on the deficit.

Higher education advocates here had dreaded such an outcome, warning that deep and across-the-board cuts could be devastating for student loans, Pell Grants, research spending and other priorities for colleges and universities. Still, the sequestration, or automatic cuts, do not go into effect until 2013, and Congress could still reach a compromise or work to protect some spending while cutting from other parts of the budget.

So while the long-term impact of the committee’s failure is unclear, one thing is nearly certain, observers here said Monday: as Congress wrestles with the budget for the next fiscal year and the looming automatic cuts for 2013 and beyond, 2012 promises to be as tumultuous as 2011.

“We are likely to be churning for the foreseeable future,” said Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education. “An awful lot of people spent an awful lot of time trying to construct a workaround to the great imbalance between federal revenues and federal spending and came up empty-handed.”

The 12-member Joint Select Committee on Deficit Reduction, formed in the July compromise that increased the nation’s debt limit, was charged with cutting $1.2 trillion from the deficit before Thanksgiving. While the Association of American Universities and Association of Public and Land-grant Universities urged the committee to reach a “grand bargain” putting the nation on sounder financial footing, colleges and their supporters found plenty to worry about in the committee’s deliberations.

Pell Grants were said to be on the table for possible cuts in the panel's discussions, as were the in-school interest subsidy on student loans and tax credits and deductions for college expenses and charitable contributions.

But the failure to reach an agreement does not mean those programs are safe. And it puts a host of other, smaller federal programs in line for cuts as well, said Cynthia Littlefield, director of federal relations for the Association of Jesuit Colleges and Universities.

“The bottom line is, student aid is going to be cut,” Littlefield said. “It’s a question of degree.”

Pell Grants are immune from direct cuts through sequestration, but are still at risk because the overall spending caps will constrain the federal budget and make it difficult to maintain funding for the program at its current level. Smaller financial aid programs, including the Supplemental Educational Opportunity Grant, are likely to sustain cuts. And the fees students pay to originate federal loans will increase, according to the New America Foundation’s Federal Education Budget Project.

Congress still has a year to determine how to apply the $1.2 trillion in cuts, which are to be split evenly between defense and nondefense spending. In the meantime, lawmakers could still reach a long-term compromise on deficit reduction or change how the nondefense cuts are enacted. President Obama has vowed to veto any legislation that would eliminate the automatic cuts.

“There’s still a little over a year to try and prevent the sequester, not just by saying never mind, but by actually agreeing on real deficit reduction that doesn’t endanger research and education and a host of already programs that have already been cut,” said Barry Toiv, vice president for public affairs at the AAU.

The budgetary focus will now shift back from the super committee to the Senate and House appropriations committees, where the Education Department’s 2012 budget is still up for debate and where the spending caps for 2013 will be enacted.

“Whether or not the sequestration cuts go forward 13 months from now, it’s way too soon to tell,” Hartle said. “Sadly, I think 2012 is likely to be more of the same."