Katey Rusch/MNS
Stimulus package provides cash on college campuses
by Katey L. Rusch
Mar 16, 2009
She is the daughter of a single mother—whose income is just above the poverty line. Growing up, her mother scrimped and scrapped every last penny to put food on the table and clothes on Bethany’s back—there was no money left over to put into a college savings fund.
“I am not looking for charity; I am just looking for a little help. The same kind of help other college kids get from their parents and grandparents,” said Wagner.
The American Recovery and Reinvestment Act -- approved by Congress last month and better known as the stimulus bill -- offers increases in grants and work study, larger tax credits to families of students, and billions of dollars of state aid to kick start delayed remodeling of university buildings. It also provides more funding for research facilities on college campuses.
“This is the biggest increase in funding for higher education in history,” said Keri Fulton, spokeswoman for the Center on Budget and Policy Priorities, a Washington-based think tank. “Students will actually feel this one.”
The Center on Budget and Policy Priorities estimates the change could help 3.9 million students, such as Wagner, afford college again.
"This really marks a new era in federal education spending," said Edward Kealy, executive director of the Committee for Education Funding, the nation's largest nonpartisan education coalition.
Financial aid: federal Pell Grants and federal Work-Study
The maximum Pell Grant, which helps the lowest-income students attend college, will climb from $4,731 to $5,350 starting July 1, and $5,550 in the 2010-2011 school year. Overall, it’s a $25 billion increase in the grant, which could help another 800,000 students, according to the American Council on Education.
The increase will help those students whose parents combined annual income is less than $40,000.
"It helped me out a lot, I probably wouldn't be here if it wasn't for the Pell Grant," said Clint Goodwin, 19, a freshman political science major at George Washington University in Washington.
The larger grant could cover up to 75 percent of the cost of the average public university’s tuition, according to the American Council on Education.
“This increase could be the deciding factor for next year’s freshman class. To work, or to school?” said Terry Hartle of the council. “If they get the extra money it may seem more doable.”
The law will also raise funding for the college work-study program by $200 million, starting July 1. Work-Study helps students earn money through a part-time work program.
Tax Credits
The stimulus also increases the tuition tax credit from $1,800 for one year during a student’s first two years to a $2,500 annual credit against tuition for four years of college.
The plan raises the maximum yearly income of families and individuals qualifying for the tuition credit. Individuals making less than $80,000 or families making less than $160,000 now qualify, making the tax credit a reality for middle class families.
“Instead of receiving a low [tax] credit once during your child’s college career, now that family will be able to take advantage of a slightly higher tax credit all four years,” said Darcie Harvey policy analyst for the National Center for Public Policy and Higher Education in Washington.
The stimulus package also makes the tax credit 40 percent refundable, so families who don't earn enough to pay income tax could still get up to $1,000 to help with college expenses.
Luke Williams, a sophomore at George Washington University, has been filing his taxes independently for the past two years.
“I actually don’t file with my parents and since I make less than the minimum amount to pay income tax I couldn’t really take advantage of any kind of tax credit like this,” said Williams. “With an extra thousand bucks I won’t feel so bad about all those energy drinks I buy late at night at the library.”
The plan will also exempt some computer-related expenses under tax-advantaged college savings plans like 529s in 2009 and 2010.
Research Facilities and University Buildings
There's an estimated $15 billion for scientific research, much of which will go to universities. Funding for the National Institutes of Health includes$1.5 billion, set aside for university research facilities.
“The stimulus package has a lot of money allocated to research and much of the nation’s research is done on college campuses,” said Harvey. “The more money the school has to do research, the more assistants the university can hire, the less time professors have to spend typing data and that equates to more time the professors can spend on their classes.”
The final package cut $6 billion that the U.S. House wanted to spend to get going on building projects at colleges. However, campuses could still get some money to upgrade facilities. Of the $54 billion in money for states — $39 billion is reserved for education. A state could use that money to modernize campus facilities, helping public universities struggling to finance remodeling projects already under way.
The California State University system alone has halted 130 projects, which it values at $950 million, accounting for 13,000 jobs.
“California is just one of the many state universities systems struggling to put the roofs over their new dorms and labs,” said Hartle. “It’s disappointing the final package didn’t end up giving money directly to the cause, but I am confident states (governments), like California will see the necessity of the funding.”
Students all over the nation are struggling to pay the rising costs of their college tuition. In fact, according to the Center on Budget and Policy Priorities, the average undergraduate owes $19,000, just over half the average salary he will make in his first year out of school.
“It puts a lot more pressure on you as a student when you are always worrying about money,” said Bethany Wagner. “It’s already enough stress to write a 10-page paper on how many metaphors are in Moby Dick and ace your crazy hard organic chemistry test…then add wondering if you can afford to buy coffee or go to a concert. Its too much for one person to handle.”
