Five things you should know as we near the fiscal showdown. 

This week, President Barack Obama proposed a package of limited spending cuts to avoid the so-called sequester (aka, the across the board budget reductions that have the potential to impact student funding). If Washington does not come to a resolution over the fiscal cliff and the sequester by March 1st, programs meant to increase college access and affordability will be on the chopping block.

It’s hard enough to afford a higher education while tuition costs rise, state university funding declines, and student debt skyrockets. NerdScholar’s recent study of 1,096 college students found that students are more worried than ever about what this means for their financial aid.  Here are the five things you need to know as we near the fiscal showdown:

1. The Potential Impact to Higher Education Students is high, to the tune of a $4,021 million cut

The Office of Management and Budget concludes that a total of $4,021 million would be cut from the Department of Education’s budget in the upcoming sequester. The two offices that have the most direct impact on students’ aid are the Office of Federal Student Aid and the Office of Postsecondary Education.

In the office of Federal Student Aid, students stand to lose $133.4 million in cuts to the Federal Work Study Program and the Supplemental Education Opportunity Grant (SEOG) meaning that 162,120 students could lose direct funding that makes college affordable.

The office of Postsecondary Education would suffer cuts to programs like Gear Up and Trio that are meant to increase access for low-income and disadvantaged students to the beat of $90 million, leaving about 118,000 students high and dry.

The Wall Street Journal even reported that 375 students at Penn Sate would completely lose work-study along with 500 at Ohio State and 65 at the University of Texas at Austin.

2. 85% of Students who receive financial aid are worried about impacts to their funding and 25% would drop out if financial aid dollars were cut

It is no surprise students are very worried. 25% told us they would drop out or delay finishing college rather than take out more private loans or ask their family for help. Desperate times call for desperate measures, even if it means delaying college.

3. Students think that lowering the cost of tuition should be the top priority

Tuition is not getting any cheaper and states continue to cut funding to universities so it is natural for students to want the government to address rapid increasing tuition costs. Obama launched his 2020 goals for education, that by 2020 America will once again have the highest proportion of college graduates in the world, but students want the focus to be more on affordability. When students were asked what concerns in higher education should be priority, 61% chose to decrease the cost of tuition.

4. Barack Obama’s latest move to roll out his own package to avert further disaccord over the sequester this week shows grim signs of a rapid resolution.

In fact, 46% of students don’t believe there will be a resolution and they might be right. There was one delay in December to avert the fiscal cliff to March. Now the time nears once again and an agreement is still yet to come. We’ll have to see if Washington can work this out.

5. The nation’s defense budget: A budget that can handle a $223 million trimming if it means preserving affordable education for 280,000 students

When asked whether medical research, employment services, Medicare, financial aid cuts, or defense spending should be cut, the majority chose defense.

Photo Credit: photosteve101

About the Author: Laura Pereyra is a Communications Analyst at NerdScholar, brought to you by NerdWallet, which provides free scholarship search, student loan calculator, and college comparison tools. Follow NerdScholar on Twitter and like on Facebook.