President Signs Economic Stimulus Bill With Student Aid Increases

President Obama has signed into law a $789 billion compromise economic stimulus package that includes increases in federal student financial aid programs. The measure cleared both houses of Congress last Friday. Included are the following student aid provisions:

• More than $15.6 billion in appropriations for the Pell Grant program, to eliminate a funding shortfall and permit an increase in the maximum Pell Grant award from the current $4,731 to $5,350 for the 2009-2010 academic year.
• An additional $200 million in funding for the Federal Work-Study program.
• Replacement of the Hope federal income tax credit for the 2009 and 2010 tax years with an American Opportunity Tax credit. The maximum credit would be $2,500 for qualified tuition and related expenses incurred during the first four years of postsecondary study. Up to $1,000 of the credit would be refundable to taxpayers who don’t have a federal income tax liability. Income limits to qualify for at least a partial credit would increase to $90,000 for single taxpayers and $180,000 for married taxpayers filing joint returns.
• The addition of computer technology and equipment to qualified higher education expenses that may be paid with the proceeds of so-called 529 college savings plans.

Left out of the final bill were a House provision to increase unsubsidized federal student loan limits by $2,000 and a Senate proposal to provide $60 million in federal capital contributions for the Perkins loan program.