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Obama Administration's Economic Stimulus Bill on Higher Education

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Midst the controversy of the notorious billion dollar economic stimulus bill that was passed by Congress this year in February, many are eager to know how it will affect the diurnal aspects of their lives.

While there many facets of President Obama’s stimulus bill, the most notable is the $150 billion apportioned to education, which shows for more than twice the amount of the Department of Education’s past budgets.

Spending allocations within the educational portion of the stimulus are quite complex and controversial. Many of the critics show a great concern, lambasting the bill by saying “some of the proposals [are] wasteful spending and an ill-considered expansion of the federal government’s role.” (Dillon, NYTimes)

Traditionally, colleges and universities nationwide receive agency contributions from state and local governments. They are typically awarded approximately 19 percent from the federal level. According to an article by Sam Dillon of the NY Times, “the stimulus package would raise those federal proportions significantly.”

Educators, on the other hand, are setting their hopes high upon the promises of what this bill proposes. Many campuses and faculty jobs have been at risk of cutbacks, and with the amount of stimulus money pouring into Pell Grants, Federal Work-Study Programs, and other financial aid programs, there is an increased expectation of student enrollment and an anticipated demand for more faculty as a result.

Stimulus Bill Allocation for Education Basics (American Recovery and Reinvestment Act of 2009, (Pub.L. 111-5))

  • Pell Grants: This grant, which is sponsored by the federal government, is awarded based upon student need and does not require repayment. Maximum grant amounts per student can change depending on the amount of money available in the program. The 2009 stimulus bill has increased Pell Grant per student maximums from $4,731 in the 2008/09 academic year to $5,400 by 2012. The final stimulus bill included $17.1 billion dollars and eliminating a shortfall caused by an increase of students applying and qualifying for Pell Grant assistance.
  • Federal Work-Study Programs (FWS): Institutions can provide part-time jobs for students who are in need to cover tuition and college expenses by way of federal government funding. President Obama’s stimulus plan allows for $200 million dollars to be spent in such programs.
  • Tax Credits: Based upon an adjusted gross income, each eligible student enrolled in a college is entitled up to a $1,800 nonrefundable credit called the HOPE Tax Credit. The stimulus bill has provisionally replaced the Hope Tax Credit by instating a $2,500 credit available for four years of college, and it is 40% refundable.
  • 529 Savings Plans: The new stimulus bill imposes that computers qualify as chartered expenses under the 529 Savings Plan, a non-taxable federal college savings program.
  • Job Training: More displaced adults are now seeking advanced degrees which spawns hope in a solution to the nation’s depleted economy by fostering more educated individuals. Thus, the Obama Administration has instituted $3.95 billion towards job training: $2 billion for dislocated workers and $500 million for adults.
  • Other: Approximately $16 billion went towards energy and health science; $200 million went to AmeriCorps, a federal program aligned with non-profit organizations, etc.; $100 million allocated to teacher quality partnership grants; $500 million in preparing health care workers; $250 million in support for state data systems; $50 million toward art programs; $200 million toward computer centers in public libraries and community colleges; $8.8 billion for “high priority” needs; and $180 million for research building and construction.

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