U.S. debt ceiling may limit all financial aid

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By Lucas Wimmer

The United States government avoided crisis Wednesday, Oct. 16 in the late hours of the night as Congress passed a measure to reopen the government and prevent a credit default. If the government had not agreed to increase the debt ceiling, however, students could have faced collateral damage.Kenneth Penzkover

Chair of the UW-Whitewater College Democrats Kenneth Penzkover said a debt ceiling crisis would effect many different aspects of students’ lives, including their ability to attend college.

“Some students don’t have their parents capital to rely on in case of a crisis,” Penzkover said. “In that case, they would have to find money to borrow from somewhere else, and who knows where that would be.”

Congress will vote on whether to increase the debt ceiling, which is a limit on the amount of debt the United States can go into, in February, said political science professor Chris Chapp.Christopher Chapp

“It is certainly plausible that this is an issue we will revisit,” Chapp said.

If the debt ceiling is not increased, the United States may default on it’s debt. This may cause a lack of confidence in our government in other countries, which also could lead to a lack of investments.

“It’s like if you or I decided to not pay a credit card bill, people wouldn’t have confidence in us,” Chapp said. “The same would be true if the U.S. government defaulted on their obligations.”

Chapp said UW-Whitewater itself is a state school that receives some funding through the government, but the everyday operations of the university would not be in jeopardy.

“It’s not like Whitewater is just going to shut down, but I think what you would see is a lot of pretty severe indirect effects,” Chapp said.

These indirect effects mainly are in the stock and job markets and may effect students’ parents and their ability to help them financially, Chapp said.Madeline Walton

Madeline Walton, chair of the UW-Whitewater College Republicans, said this default would bare a heavy burden for students themselves.

In the case of a default, the government would need to appropriate funds differently, and grants to universities and financial aid could be frozen, Walton said.

According to the College Board, nearly two-thirds of college students receive some sort of financial aid.

Companies would not be able to grow and develop as much without the backing from the government, which also would eafect college students’ abilities to get a job out of college, Walton said.

“It’s a scary thought, and something I don’t want to see happen,” Walton said.

Penzkover said if the United States government did default on their loans, a stock market crash would be sure to follow, and that would be followed by a job crisis.

“This would effect students going into the workforce because it would create an insecure economy,” Penzkover said.

Penzkover said the default also would hurt the value of the dollar in a global sense.

The next federal budget is due in January 2014.