Budget cuts: five groups likely to feel the pinch
If there's one thing that's lacking in the debt deal that president signed on Aug. 2, it's specifics. It asks for $1.5 trillion in spending cuts over the next 10 years, but gives few concrete details about where they'll come from. The deal does outline some changes for student loans, and it leaves out renewals for a couple of unemployment benefits programs. But most of the envisioned budget cuts won't become clearer until this fall, when a 12-member, bipartisan "super committee" gives its recommendations to Congress. Some Americans may be particularly vulnerable to their budget choices. Here are five groups who could see a reduction in government largesse:
1. College and graduate students
Students are one of the few groups that have already seen the blow of Washington's budget ax – and they could see more. Until now, graduate and professional students have been able to count on the federal government to subsidize interest on their loans until after they graduate. Starting July 1, 2012, that subsidy will stop, and interest will begin to accrue while students are still in school. Eliminating the subsidy will save an estimated $18.1 billion from fiscal year 2012 to 2021.
Also on July 1, 2012, some repayment incentives for student loans will vanish. Currently, students can receive a reduction in the interest rate or origination fee of a loan by making the first 12 payments on time. Ending this program will save the country an estimated $3.6 billion from fiscal year 2012 to 2021. However, the rules still allow students who opt for automatic debit payments to receive an interest-rate reduction.
For the moment, the Pell Grant program has been preserved. The program that helps low-income students pay for college will receive $17 billion over the next two years. But budget-cutters are looking everywhere to save money.
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