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The Daily Tar Heel

Fiscal crisis threatens ?nancial aid

A looming fiscal crisis in Washington, D.C., could have long-lasting effects on financial aid and research programs at universities nationwide.

If Congress fails to produce a deficit reduction plan by December,then $1.2 trillion in cuts will be implemented during the next ten years — through a process known as sequestration — according to a budget deal reached last year.

As lawmakers seek a solution,the UNC system is preparing for possible steep funding reductions that would result from Congress’ failure to act.

The system runs the risk of losing more than $79 million in federal funding, according to a study conducted by UNC-system federal lobbyist Bradley Ballou.

“It hurts everyone’s interest,” he said. “No one wants sequestration.

Students might see their financial aid curbed as a result of the cuts.

“It wouldn’t be awful, but we don’t want it,” said Shirley Ort, associate provost and director of scholarships and student aid for UNC-CH.

While federal Pell grants are protected by the Budget Control Act, Ort said federal work-study programs could be cut by $125,000 — an amount that would fund 62 students for one year at UNC-CH, Ort said.

There would also be cuts to the Supplemental Educational Opportunity Grant of $613,000 a year, meaning 38 UNC-CH students could lose their grants, Ort said.

In July, UNC-CH Chancellor Holden Thorp and system President Thomas Ross responded American Universities and the Association of Public and Land-Grant Universities.

“Sequestration is an undiscerning and blunt budget tool that would substantially harm the nation’s future,” the letter said.

The letter also said that since research funding is not a large contribution to the deficit, it should not suffer such drastic cuts.

“Our university depends on funding from federal agencies and science agencies like the National Institute of Health, National Science Foundation and Department of Education,” said Christopher Brown, UNC-system vice president for research and graduate education, adding that those agencies would field an estimated 8.4 percent reduction if sequestration takes effect.

Brown said funding for research is money well spent because it boosts job creation.

Every dollar spent on research can result in $3 to $16 worth of new products and increased consumption and employment for service industries, he said.

Michael Walden, an economics professor at N.C.State University, said effects of federal cuts might be more long-term and could be especially difficult for medical and nutrition research.

Despite the severity of the cuts, Ballou said he is optimistic that Congress will avoid sequestration and pursue long-term debt reduction.

He said the threat of such cuts “holds Congress’ feet to the fire.”

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