For those who are planning to go to college and get financial aid through non-third party organizations such as Federal Student Aid (FAFSA) and CSS Financial Aid Profile, federal grants will not be as generous as they were if the fiscal cliff happens. With the fiscal cliff, all departments in the United States, including the Department of Education, will have to face approximately 8% budget cuts, meaning there will be fewer grants from governmental organizations, and higher interest rates for those who will take federal student loans. This also means that more students will seek financial aid opportunities from private universities and third-party organizations, putting students in a greater risk with higher interest rates. In order not to become like John who is suffering from a serious financial problem, two parties have to reach a considerable compromise so that the budget on education will be adjusted as little as possible.
Less Job Opportunity.
The fiscal cliff will also greatly affect those who are considering taking jobs in college. If the fiscal cliff becomes a reality and tightens up the economy, the young generation who will be situated to enter this economy without any financial basis will suffer. Due to expirations of several tax cuts, the tax increase is projected to slow down the economy, discouraging corporations and owners from hiring more people and paying more in wages. Even if you get a job, the increased taxes will put you in a financial dilemma. According to The Washington Post, the fiscal cliff will raise the income tax by about $802 for those who are single and make $20,023 a year, about $1,310 for those who are single and make $46,605 a year. These cases will be extremely relevant to current high school students who will be working while in college, or students who will be college graduates with an entry-level job. If you get married, the situation gets even worse. If a married couple under age 65 make $57,462 a year together, the tax will increase by as much as $2,252. If the two parties can compromise before Dec. 31, the increase in income tax could be as low as $372 for those who are single and make $20,023 a year, as low as $864 for those who are single and make $46,605 a year, and as low as $1,062 for those who are married, under age 65 and make $57,462 together. Considering the projections carefully, you should be already planning your near future and thinking about the possible effects of the fiscal cliff on your career.
The fiscal cliff is an alarm for American politics. Over the last few decades, the government has mismanaged much of the economy by fluctuating tax and budget plans. After the massive recession that the country had to go through after the Bush administration’s failure, the politicians must take responsibility. The future of your life in your 20s is now in the hands of politicians. With this wakeup call, politicians must learn the lesson that it is their job to practice healthy economic policies, not just appeal to people with unrealistic economic policies. In the end, the people who will vote for those politicians will be us; therefore, we must also be alarmed by the upcoming changes, and worried about possibilities.