College students are among those who will feel the brunt of sweeping federal spending cuts that kicked in Friday.
Tens of thousands of Akron-area students likely will lose money or federally funded jobs or pay more for their loans.
The largest number will be affected in an increase in origination fees for federal subsidized and unsubsidized loans — the backbone of many students’ financial aid arrangements.
While the amount individually will be small, the net effect for all students at any given campus could be large.
The fee, which is charged to process the loan, will grow from 1 percent to 1.053 percent.
According to Kent State University calculations, a student with a $5,500 loan will pay an additional $2.92 to the federal government. That amount generally is deducted from the loan, which means there are a few dollars less to apply toward tuition for each student.
For every 10,000 students who secure loans at Kent or the University of Akron, that could amount to a $29,000 reduction in tuition payments.
Origination fees for the Federal Parent Loans and Graduate Plus Loans will grow from 4 percent to 4.212 percent, according to KSU. That means the federal government would get an extra $19.08 on a $9,000 Plus loan.
Financial awards and work-study grants also will be affected.
Michelle Ellis, executive director of financial aid at the University of Akron, said that because details aren’t yet available, UA has not reached out to inform students that some of their awards may be in jeopardy.
“We’re not certain how these reductions would apply,” she said. “We didn’t think it was appropriate to alarm them now.”
What is clear is that two of the three largest federal financial aid programs for the neediest students would be cut — or “sequestered” — by 5.1 percent each. The Pell Grant, the largest financial aid program, is exempt from cuts in the first year.
But neither colleges nor students can assume that the 5.1 percent cut will translate automatically into a 5.1 percent loss in funds for them.
Megan McClean, managing director of policy and federal relations at the National Association of Student Financial Aid Administrators, said that the complex allocation formula includes a base amount and sometimes extra allocations for some institutions.
“It won’t necessarily affect you at a 5.1 percent amount,” McClean said.
The Federal Supplemental Educational Opportunity Grant funding will be cut nationwide from $739 million to $701 million, she said. According to a state-by-state breakdown provided by the White House, Ohio would see the fifth-largest cut in the grant.
Assuming a 5.1 percent cut, about 75 KSU students could lose their awards in the coming school year, the university said. About 1,175 KSU students currently receive the grant.
At UA, about 100 students could lose their $400 awards, Ellis, the head of financial aid, said. The amount of the award is determined by each college. At UA, about 2,800 students get the grant.
Meanwhile, the 5.1 percent cut in work study funds will reduce the program nationwide from $983 million to $933 million.
That could amount to a decrease of $100,000 at Kent State, spokeswoman Emily Vincent said. About 800 KSU students now get work-study in varying amounts.
At UA, 20 students could lose the work-study grant out of the 416 who now receive it, Ellis said.
In addition, the federal TRIO programs — which provide outreach to low-income students who are the first in their family to go to college — also would be reduced.
Finally, sequestration would take a bite from research. Grant McGimpsey, KSU vice president for research, said it already has.
“Federal funding agencies have delayed funding decisions and canceled or postponed programs,” he said in a media release. The effects of a prolonged sequester “will be negative and long-lasting.”
The federal government provides about 60 percent of research funds nationwide, according to the American Council on Education.
Still, Ellis has not been hearing from students alarmed about the possibility of losing funding: “They typically will think about it when they get their new award notification.”
Universities send letters to students in March and April about their awards for the coming year. The changes kick in with the start of the 2013-14 year.
Carol Biliczky can be reached at firstname.lastname@example.org or 330-996-3729.