The Education Department will have to slash services for more than 1.8 million disadvantaged students and thousands of teachers would lose jobs if congress allows automatic budget cuts to kick in at the end of the year, Education Secretary Arne Duncan warned on Wednesday.

Last summer, a bipartisan congressional panel agreed to outline a plan to cut $1.2 trillion from the nation's deficit over 10 years, coinciding with a new budget law. The agreement gave congress 18 months to come up with the cuts. If they don't, all federal programs, including the military and education initiatives, will have to cut all program budgets by 7.8 percent--which means more than $3 billion would be cut from the education budget.

Duncan urged Congress to find an alternative to automatic cuts as a means to reduce the budget deficit-one that won't cripple his department's ability to serve students. High-poverty schools and schools with high dropout rates would suffer the brunt of the blow, he said. The automatic cuts, commonly referred to as sequestration, would also hit college financial aid programs hard, Duncan said.

Sequestration would "jeopardize our nation's ability to develop and support an educated, skilled workforce that can compete in the global economy," Duncan told a Senate appropriations panel.

Sen. Richard Shelby, R-Ala., agrees that Congress needs to prevent the automatic cuts. But the department also needs to reduce its spending budget, he said. The Education Department requested a $1.7 billion increase in its discretionary budget for 2013.

"Our nation cannot continue to spend money we don't have," Shelby said.

Since 1970, federal spending per student, after adjusting for inflation, has nearly tripled, but students' academic performance has not improved correspondingly said Neal McCluskey, associate director of the Center for Educational Freedom at the Libertarian-leaning Cato Institute.

"Cuts such as those that would be made to federal education programs through sequestration are both necessary and overdue," McCluskey said.

But Duncan countered that the Education Department has already cut more than $1.2 billion from its budget for programs that had proved inefficient.

When it comes to educational funding, Duncan suggests a different attitude--education as an investment, not an expense. Solid education funding is necessary to compete with countries that are proactively investing in education, he said.

But Brian Riedl, a budget analyst with The Heritage Foundation, a research and educational institution, said the federal deficit cannot be ignored: "Each year's huge federal deficit increases the mountain of national debt borrowed from future generations of Americans. Congress needs to cut federal spending sharply and quickly."

Because school districts wouldn't be affected by budget cuts until the 2013-2014 school year, lay-ffs won't be necessary for the upcoming school year and lawmakers could find an alternative plan in the meantime, said Anthony Miller, deputy Secretary of the U.S. Department of Education. Miller issued a guidance memorandum to Chief State School officers clarifying the impact of sequestration.

"Although most of the harm from the sequestration would not be felt in education programs until the 2013-14 school year, the damage from across-the-board cuts in that year would be severe," Miller said.

If sequestration does goes into effect, about $2.7 billion could be cut from Title I, a program that focuses its efforts on providing equal learning opportunities for disadvantaged and low-achieving students; Head start, a program that provides education, health, nutrition, and parent involvement services to low-income children and their families; and state grants to special education programs.

Because the Education department would have to lay off staff members who determine financial aid eligibility, expedite financial aid and process loan requests, the cuts would cause problems for college students too. As a result, students could experience delays in their financial aid decisions, Duncan said.

Although Republicans and Democrats can't agree on a new budget plan, almost everyone agrees that sequestration would be destructive, said Sen. Tom Harkin, D-Iowa, chairman of the subcommittee: "We all must come together with good will to hammer out a balanced agreement that will not only prevent sequestration, but reduce our deficit and protect America's families."

The Associated Press contributed to this report.