The Stimulus: Now What?

     With the $787 billion economic stimulus package a done deal, signed into law by President Obama, the higher ed community's Washington watchdogs have been poring over its 1,079 pages line by line, trying to identify definitively what's in the measure, and what isn't, for the country's colleges and universities.
     What's in it is most of what they wanted, including $17 billion in new funding for the Pell Grant program that will enable a boost in the maximum award to $5,550 by next year; and a tax credit that will cover up to $2,500 (it's currently $1,800) of the cost of college tuition and other related expenses, like books and supplies, for the first four years of college.
     The Association of American Colleges and Universities, which includes 60 public and private research institutions, likes the $16 billion the stimulus provides for research through several federal agencies.
     The American Association of Community Colleges welcomes $39 billion designated to states for education at all levels, but generally requiring them to support their higher ed institutions through FY2011 at least at the FY2006 level.
     What isn't in the package that the higher ed community pushed hard for was funding for campus infrastructure projects. Apparently, bridges and highways get infrastructure priority.
     Still, as American Council on Education President Molly Corbett Broad said after the final Senate vote that sent the bill to the President for his signature, "we recognize and appreciate the historic resource levels for higher education provided by Congress and the Obama administration."
     She added: "I can assure you that we are up to the task and that our colleges and universities will put these new resources to work immediately."
     Well, not necessarily immediately. They have to wait to get the money, or solid assurances that they will get it, after the Department of Education and other agencies write the nitty-gritty regulations that will put the law into efffect. That's how things work in Washington.
     It's not like just going to the bank and walking out with the cash, particularly in this economy, as bankers, businesses and consumers are finding, let alone colleges and universities. But that's a subject for somebody else's blog.

Comments

[Textbook Guru]

The inclusion of textbooks and course materials as eligible for tax credits is particularly noteworthy since these important academic tools, which are both required and vital to a student’s academic success, are rarely covered by traditional financial aid. Combined with proactive campus-based efforts underway to make course materials more affordable for students, the new tax credits will go a long way to help students succeed in school and in the economy.

An important aspect of the $2,500 American Opportunity Tax Credit is that 40 percent of it is refundable. This means that nearly one-fifth of current high school seniors who would have received no tax credit under the prior system will receive a tax cut to make college affordable for the first time. Under the prior tax code, the Hope Credit can only be used to offset tuition and related fees.

My organization, the National Association of College Stores, supports efforts to enhance affordable and equitable access to quality course materials, and has long been an advocate for including them in tax credits and the elimination of state sales taxes on course materials.

[ustate05]

The stimulus package may have its benefits for postsecondary ed, and increasing the Pell Grant is a 'no-brainer'.

But the Administration's budget proposal is another story, especially with regard to federal student loans. The current system, while not ideal, works. Schools have the choice of delivering loans through either the federal direct loan system, or the public-private ffel system - having the option to choose allows schools to consider their staffing, technology infrastructure, cash flow needs, etc. when determining student loan program participation.

The budget proposal will eliminate that choice - forcing all schools to use the U.S. Department of Education for delivery of federal loans, while still having to work with private lenders on non-federal loans. For some schools, direct loans are fantastic. But since that program has only gained about 25% of the student loan market in 15 years (maybe up to 30-35 this year), it's clear that most schools want to stay away (possibly because switching to direct loans often requires increased staffing needed in the aid office).

Moreover, there are serious concerns that the direct loan program will not be able to handle the enormous increase in volume...if you think working with private lenders is a hassle, try calling the department of education when something goes wrong.

The student loan budget proposal is a serious concern.