On Tuesday, February 17, 2009, the stimulus bill (the “American Recovery and Reinvestment Act of 2009”) was signed into law by President Obama. Included in this legislation were several spending initiatives for higher education.
The following components of financial aid were affected by this legislation.
Federal Pell Grant Increases:
The stimulus bill will provide slightly more than $17 billion to increase the maximum Federal Pell Grant award from $4,731 for this past academic year (2008-09) to $5,350 for the 2009-10 academic year and $5,550 for the 2010-11 academic year.
Federal Pell Grants are usually awarded only to undergraduate students who have not earned a bachelor’s or a professional degree. The amount you will be eligible to receive depends on your financial need, your cost to attend the school, and your full-time or part-time status. The Pell Grant is awarded to you through your school’s Financial Aid Office.
Work Study Program:
In addition to the Pell Grant increases, the bill also provides an additional $200 million for the Federal Work-Study program. The Federal Work-Study program provides part-time jobs to undergraduate and graduate students with financial need, allowing them to earn money to help pay education expenses.
New Tax Credits for College Students:
The “American Opportunity Tax Credit” allows students (or their parents) to claim up to a $2,500 tax credit for tuition, fees, and textbook expenses. It also enables more students to take advantage of the tax credit. Single filers earning up to $80,000 and joint filers up to $160,000 can utilize the full credit.
According to Mark Kantrowitz of finaid.org, “Families that have been salting away money into 529 savings plans for their kids, only to see that money evaporate in the dismal 2008 stock market, can use the new credit to play catch up. That’s because you’re not allowed to use the new education tax credit and tax-deductible 529 earnings in the same tax year. Use the new credit in 2009 and 2010”, says Kantrowitz, "and give the 529 a chance to regain lost ground. Then use that money for the last two years of school.” For more specific information on how you can benefit from this tax credit, visit the IRS website (www.irs.gov) or consult a tax professional.
Important Updates Regarding Ohio Higher Education Institutions:
Although the stimulus bill will provide some benefit to many students, all of Ohio’s colleges are facing reduction or elimination of their endowments, state grants and scholarships. As of February 18th, the Ohio Board of Regents reported the following for the 2009-2010 academic year:
- Elimination of the Ohio Academic Scholarship Program
- Elimination of Regents Graduate/Professional Fellowship program
- Proposed Elimination of the Student Choice Grant Program
- Proposed Changes to the Ohio College Opportunity Grant
Remember, by simply filling out the FAFSA each year, your financial aid office and the Department of Education will determine your eligibility for grants and scholarships. work-study and federal education loans. For more information on how you may qualify for financial aid: Why the FAFSA is More Important Than Ever
For additional information or questions, please feel free to contact us at 1-877-256-0066.