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FinAid.org founder Mark Kantrowitz on how the potential fiscal cliff would impact college students.
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Right at the clock seats down for Washington to come up with a solution to the fiscal clip there's another group of folks expected to get high hit hardest automatic cuts -- in -- place.
-- about college -- my next guest says many families will be worse off next year compared to this year.
Here to explain Marc -- -- founder and publisher of font -- then aid that is.
Fitting it dot org mark -- -- back to the show it's always great to have you here.
So let's turn this idea what is gonna what is the fiscal clip that we go over what is it and do.
If we take those budget cuts to college student -- Well and in two ways one is they sequenced ration we'll cut.
All student -- bought the program and by 8% across the board.
The pell grant to sheltered in 2013.
But -- not 2014 it also will be cut automatically.
By 8%.
Now American opportunity tax credit expires at the end to 2012.
As well.
So -- it sounds like.
And here's your number right here.
That the fiscal -- hit it could result in 8% cut in federal student made.
So clearly happy currency higher costs for college how can -- cope with that if they have to do it on their own dime they can't borrow money.
Well they need to save before college every -- say visit our -- going to have to borrow.
Search for scholarships are free web sites like fast Web.Com every dollar you win is -- -- -- don't have to borrow.
-- and definitely want to make sure your -- -- -- -- I think that's obvious.
Let's break this down a little bit there's all kinds of -- -- -- what what's the impact on pell grants federal student loans and college tax credits.
This fiscal cliff and going over -- so let's break it down pell grants -- -- Right while the pell grants have been unchanged for two years are going to increase by 85 dollars just a drop in the bucket.
But they still face an eight billion dollar funding shortfall which has to come from somewhere.
When you're trying to mean -- gave fiscal -- you have to cut something to retain the program.
That's probably going to be eliminating subsidize interest on student loans which gets -- three course of the way.
And they might tied in eligibility on the pell grants of that fewer people -- qualified federal student loans.
Right about student loans as I said they subsidize interest.
On the east subsidized Stafford loan would go away and that 3.4 percent interest rate that got extended for one year.
In the midst of this election that won't get extend beyond -- until June 30 because there's no election next year.
And college tax credits any change there.
While the American opportunity tax credit will expire at the end -- 2012.
If it is not extended that we refer to the hope scholarship tax credit.
Which means sub 12500 dollars a year to 181018100.
Maybe 19100 dollars a year and only two years -- -- -- four.
Well mark thanks for coming on tonight it's an absolute pleasure to have you here I think -- something that nobody thought about what the fiscal -- so worried about other stuff our taxes.
Defense dollars and no we thought about college student loans thanks for breaking it down for us.
