Sunday, July 31, 2011

Student Aid at Stake in Debt Crisis

Were federal financial aid to suddenly be withdrawn cold-turkey, the secondary education bubble would pop faster than the real estate bubble popped in 2007.

WASHINGTON (CNNMoney) — College students heading back to school in the next few weeks could get caught in financial limbo if Congress doesn’t make a deal to keep United States from defaulting on its debt.
Nobody knows for sure what will happen. But student financial aid will be among the tough choices for Treasury, as it figures out what bills get paid, if Congress fails to meet an Aug. 2 deadline to raise the cap on federal borrowing and defaults on its debt.
At stake is some $800 billion in student financial aid, ranging from Pell Grants to direct student loans.
Even though many students have already gotten word of their grant or loan levels for fall semester, in many cases, the money hasn’t been dispersed and won’t be available until school starts this fall.
"I don’t think anyone’s certain, exactly, what will happen," said Haley Chitty, spokesman for the National Association of Student Financial Aid Administrators.
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