House Approves Stimulus Package With Student Aid Increases; Senate Version Offers Less in Student Benefits

The U.S. House of Representatives has approved an economic stimulus bill that offers increases in several student aid programs. All House Republicans joined 11 Democrats in voting against the package, which cleared the House on a 244-188 vote.

The measure includes the following student aid provisions:

• Increase the maximum Pell Grant to $5,350 for the 2009-2010 academic year.
• Provide more than $15.6 billion to cover a shortfall in Pell Grant funding due to an increase in the number of students applying for and qualifying for Pell Grant support.
• Increase Federal Work-Study program funding by $490 million to help more low- to moderate-income students work to pay a portion of their college expenses.
• Increase annual unsubsidized Stafford loan limits for undergraduate students by $2,000  and aggregate limits by $8,000.
• Provide an American Opportunity tax credit of up to $2,500 for college expenses during the first four years of study. Under the proposal, families who owe no federal income tax still could qualify for reimbursement of up to $1,000 in eligible college expenses. The credit would phase out for taxpayers with incomes in excess of $80,000 ($160,000 for married couples filing joint returns).

Senate action
Meanwhile, U.S. Senate committees have approved economic stimulus bills that offer smaller increases in student financial aid. The Senate Appropriations Committee reported out a version that provides an additional $13.9 billion for Pell Grants and increases the maximum grant by $281 for 2009-2010.

The Senate version includes $61 million in capital contributions for the Perkins loan program but does not include the increased work-study funding or the boost in unsubsidized loan limits that the House bill proposes. A tax package approved by the Senate Finance Committee also includes an American Opportunity tax credit, although the Senate version provides a maximum refundable credit of $750.

The full Senate is expected to act on the legislation this week.