Student Aid Provisions Remain in Compromise Senate Stimulus Bill

A compromise version of an economic stimulus package worked out by a bipartisan group of four U.S. Senators last Friday preserves proposed increases in federal student aid programs. The compromise proposal cuts approximately $100 billion from the original stimulus package in the Senate.

The compromise includes the following student aid provisions:

• Approximately $13.9 billion more for Pell Grants to eliminate a funding shortfall and provide for a $281 increase in the maximum Pell Grant award for 2009-2010 and a $400 increase in the maximum award for 2010-2011.
• An allocation of $61 million for federal capital contributions for Perkins loans.
• Replacement for tax years 2009 and 2010 of the current Hope federal income tax credit with an American Opportunity Tax credit. The proposal would provide a maximum credit of $2,500 for qualified tuition and related expenses incurred during the first four years of postsecondary education. Up to $750 of the credit would be refundable to taxpayers with no federal income tax liability.

The Senate is expected to vote on the compromise measure today. Once passed by the Senate, differences between the Senate bill and a stimulus packaged approved earlier by the U.S. House would have to be ironed out.