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Stimulus Bill Offers Aid For Higher Education But Falls Short Of Expectations

By CityTownInfo.com Staff

February 13, 2009

As the government prepares to approve the stimulus bill, financial experts are hailing the bill's increase in Pell grant funding. But others say that the package falls short of the aid for which students and institutions of higher learning had hoped.

US News and World Report notes that the provision to increase the Pell grant by several hundred dollars won bipartisan support. The grant is the largest offered by the federal government to low-income students.

According to the article, the Pell currently awards a maximum of about $4,700 to students who qualify, but under the stimulus package, that figure will increase to about $5,350 this fall, and then approximately another $200 in the fall of 2010. Additionally, the grant would be made available to about 800,000 more families than before. Currently, approximately 6 million students receive Pell grants.

"This would be the biggest increase in the history of the Pell grant program," said Terry Hartle, a spokesperson for the American Council on Education, an advocacy group for 2,000 public and private colleges, in an interview with Minnesota Public Radio. Hartle told MPR that the boost would provide much-needed assistance to low-income students.

The bill's education tax changes are expected to simplify the current law. Starting next year, the bill will allow taxpayers earning up to $80,000 (or $160,000 for joint filers) to reduce their tax bills for the first $2,000 of books and tuition. Any educational expenses beyond that will receive a partial credit, and those who don't owe taxes will be eligible for refunds.

But tax experts point out in US News and World Report that the stimulus bill falls short of fixing some of the problems with the current tax breaks. Andrew Reschovsky, a tax expert at the Robert M. La Follette School of Public Affairs at the University of Wisconsin-Madison, notes that many taxpayers will still only receive a small portion of their education costs. And unlike the Pell grant which is automatically credited against students' tuition bills at enrollment, families will still be required to scrape up funds when tuition bills are due, and will only receive credit when taxes are filed.

School officials at Minnesota's Metropolitan State University expressed disappointment that the stimulus bill will not be providing funds to fix up campuses as originally expected. The school was counting on about $6 million in federal aid to erect new classrooms. Similarly, the University of Minnesota had hoped to renovate classrooms and improve Internet connectivity at century-old Folwell Hall, where 12,000 students a year take foreign language courses.

Overall, however, U of M officials are pleased with the stimulus package, as are many financial aid experts. And Congressional Democrats expect that the bill will greatly assist families.

"Both the tuition tax credit and the significant boost in the Pell grant scholarship will be a huge help for low-income and middle-class families struggling to pay for college," announced Melissa Salmanowitz, press secretary for the House Education and Labor Committee.

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