An economic stimulus bill introduced in the House would increase the maximum Pell Grant by $500, increase unsubsidized Stafford Loan limits by $2,000 and provide an additional $490 million for federal work-study.
In addition the bill provides billions in additional funding to help ease the budgets of higher education institutions and states.
House Appropriations Committee Chairman Rep. David Obey (D-WI) released details of the American Recovery and Reinvestment Bill of 2009, legislation "designed to create and save 3 to 4 million jobs, jumpstart the economy, and begin the process of transforming it for the 21st century" according to Obey's press release. Over the next two weeks, Congress will be considering this bill, which includes $550 billion in investments and $275 billion in economic recovery tax cuts.
Obey's press release recognized that the bill would cause "a large deficit for years to come," but maintained that without the Congressional action, "those deficits will be devastating and we face the risk of economic chaos."
"Tough choices have been made in this legislation and fiscal discipline will demand more tough choices in years to come," the press release states. Obey noted that there are no earmarks in the bill.
"Our short term task is to try to prevent the loss of millions of jobs and get our economy moving," according to the press release. "The long term task is to make the needed investments that restore the ability of average middle income families to increase their income and build a decent future for their children."
According to the summary released by the House Appropriations Committee, the bill would provide the following additional funding for student aid.
- Pell Grants: $15.6 billion to increase the maximum Pell Grant by $500, from $4,850 to $5,350 for the 2009-10 academic year.
- Federal Work-Study: $490 million to support undergraduate and graduate students who work.
- Student Loan Limit Increase: Increased limits on unsubsidized Stafford loans by $2,000.
- Student Aid Administration: $50 million to help the Department of Education administer surging student aid programs while navigating the changing student loan environment.
The bill also provides additional funding that will benefit higher education institutions, including:
- $20 billion for school renovation and modernization, including technology upgrades and energy efficiency improvements: $14 billion for K-12 and $6 billion for higher education
- $1 billion for 21st century classrooms, including computer and science labs and teacher technology training.
- $79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities distributed through existing state and federal formulas, $15 billion to states as bonus grants as a reward for meeting key performance measures, and $25 billion to states for other high priority needs such as public safety and other critical services, which may include education.
A detailed report on the bill is available on the House Appropriations Committee Web site. This report provides the following details about higher education spending in the bill.
Pell Grants
Recovery funding: $15.636 billion
The bill eliminates the Pell shortfall and increases the maximum award by $500. The bill also pays off the shortfall in the mandatory spending component of Pell (from CCRAA).
Under the economic recovery bill, the (discretionary) maximum Pell Grant would increase by $500, from $4,360 to $4,860 for the 2009-2010 academic year. With the additional $490 in mandatory funding, the
total Pell maximum would be $5,350. The cost of a $500 Pell award increase, plus retiring prior
year shortfalls, is now $15.6 billion over two years, based on interim updated CBO economic
assumptions and applicant growth, as more students are applying and qualifying for more
assistance. These additional funds will provide immediate financial relief to an additional
800,000 students and their families who are struggling to pay for the cost of a higher education
during the economic downturn.
Pell Grants (mandatory)
Recovery funding: $1.474 billion
In addition to the shortfall for the discretionary part of the Pell Grant program, there is a
mandatory Pell Grant shortfall for the 2009-10 award year. This funding, initially included as
part of the College Cost Reduction Act, enables a student's Pell Grant award to be increased by
$490 each year. Providing this additional funding in the economic recovery bill will provide
additional financial relief to the estimated 7 million Pell Grant recipients.
Student Loan Limit Increase
Recovery funding: N/A ($30 million estimated savings)
Significant job loss, high tuition prices, and poor credit are making it difficult for students and their families to borrow adequate amounts through the Federal guaranteed loan program, and in some instances forcing them to take out unsubsidized, private loans. The economic recovery bill includes a provision to increase unsubsidized loan limits (loans for which the Federal government does not pay loan interest
while a student is enrolled in school) by $2,000 for undergraduate students. This action will help
students and their families avoid having to seek private loans which have significantly less favorable
terms for students.
Student Loan Lender Special Allowance Payments (SAP)
Recovery funding: $10 million
Under the Federal Family Education Loan (FFEL) program, the Federal government ensures
lender participation through a subsidy known as the Special Allowance Payment (SAP), which
includes a lender's cost of borrowing money. The SAP is currently indexed to the Commercial
Paper rate (CP), which Congress intended to serve as a measure of the rate at which lenders were
able to borrow money. The recent economic crisis has left the CP rate artificially low, due to
limited trading. Language is included in the economic recovery bill to index the SAP to the
London Interbank Offered Rate (LIBOR), which is closer to the historical CP rates prior to the
economic crisis, for one quarter. Substituting LIBOR for CP will help lenders avoid significant
loss resulting from differences between the two rates, provide stability in the student loan
system, and help to ensure access to financial aid for college students in 2009.
College Work-Study
Recovery funding: $490 million
College Work-Study provides funds to colleges, which must be matched with 25 percent non-
Federal funds, to support low and moderate-income undergraduate and graduate students who
work while attending school. In addition, each participating institution must use at least 7 percent
of its Work-Study allocation for payments to students employed in community service activities,
such as community-accessible childcare and assistance for disabled students. Providing increased
funding would increase the number of students working in local communities. The additional
funds in the economic recovery bill, when combined with institutional matching funds, will
result in a total of $613 million that will be available to support an estimated 200,000 new
students in fiscal years 2009 and 2010.
Student Aid Administration
Recovery funding: $50 million
The Department of Education administers an estimated $82 billion in Federal student aid
programs and policies, including Pell Grants, guaranteed and direct loans, and two new lender
subsidy programs authorized by the College Cost Reduction Act, which help more than 11
million students and families pay for college. The Department of Education is under severe
pressure to administer these surging student aid programs as more people seek a higher education
due to the poor economy. Additional funds will support the staff and resources necessary to
respond to the changing and complex student loan environment involving banks, colleges, and
lenders, and to service the surge in the Direct Loan program administered by the Department.
Higher Education Repair and Modernization
Recovery funding: $6.000 billion
The economic recovery bill includes $6 billion for institutions of higher education (IHEs) for
modernization, renovation, and repair projects. The funds would be distributed to States by
formula in proportion to the State's share of full-time equivalent undergraduate students.
Funding will be allocated by States to institutions based on the demonstrated need of each
institution for facility modernization, renovation, and repair. Priority consideration shall be given
to institutions that serve high numbers of minority students, institutions impacted by a major
disaster; and institutions proposing to improve energy efficiency. The higher education
modernization grants would be used for the same purposes as the K-12 modernization grants,
including health and safety repairs, facility modifications to provide access for disabled students,
and educational technology infrastructure upgrades, as well as energy efficiency projects.
Teacher Quality Enhancement, State Grants<
Recovery funding: $100 million
The Teacher Quality State Grants program is a competitive program which provides grants to
States to improve the quality of the teaching workforce. Among other things, States may use
grant funds to reform teacher licensing and certification requirements; provide alternative
methods of teacher preparation; and provide alternative routes to State certification. The funds
provided in the economic recovery bill will assist States in modernizing the teaching workforce,
address teacher shortages, and provide new routes to teaching for jobless individuals seeking to
enter the teaching field.
Training for Primary Care Physicians and Nurses
Recovery funding: $600 million
A key component of attaining universal health care reform will be ensuring the supply of
primary health care providers - family medicine, internal medicine, pediatricians, dentists, and
nurses. Funding for health professions training for these disciplines has withered in the past
decade. The $600 million provided will double annual funding for training primary care doctors
and dentists, as well as double support for nursing programs such as nurse scholarships, nurse
faculty loans, and advanced nursing. The increased funding will also increase the number of
health care providers that can be supported through the National Health Service Corps program.
States that are moving toward universal coverage have already discovered the painful reality that
coverage doesn't address the problem of the long waits or refusals for service that patients
experience because of primary care doctor shortages. HHS estimates that 7,000 additional
primary care physicians currently are needed in rural and inner-city areas and that by 2020 there
will be a shortage of 66,000 primary care doctors nationwide. For the past decade, the U.S. has
experienced a significant shortage of nurses, a shortage that HHS projects will grow to more than
one million by 2020. This funding is a first step to rebuild the training infrastructure and support
students who can revitalize the primary care supply line. Funds provided in FY 2010 will
provide the second year of support for the new programs supported by FY 2009 funding.
University Research Facilities
Recovery funding: $1.500 billion
This program, authorized in section 481A of the Public Health Service Act, supports renovation
and construction of university research facilities. These institutions need adequate infrastructure
to compete for the biomedical research grants supported by the National Institutes of Health
(NIH) to advance the nation's scientific enterprise and maintain its international standing.
Funding has not been provided for the past three years. The National Science Foundation
estimates that academic institutions have about $3.9 billion in deferred projects to repair and
renovate biomedical science research space. (FY 2005 Survey of Science and Engineering
Research Facilities) Funds are awarded competitively through a request for applications with a
statutory board to conduct the peer review. Bill language for the $1.5 billion has been tailored to
limit awards to renovation and repair rather than new construction to ensure that funds can be
spent quickly and to permit the purchase of instrumentation.
NIH Research
Recovery funding: $1.500 billion
Economic recovery funding will support 21st century science and engineering research to bring
the nation needed health breakthroughs. Funding for biomedical research supported by the
National Institutes of Health (NIH) has almost flat-lined after the doubling period at the
beginning of the decade, imperiling high risk, high return research that was sparked during the
doubling. This funding will help return NIH to a predictable investment stream and secure the
earlier investments Congress has made. Funds will be allocated by competitive peer review to
universities nationwide, as is current NIH funding, and to NIH intramural research. Since NIH is
currently able to support less than 20 percent of approved applications, it will be able to disburse
this funding without delay through its regular grant cycles. Funds provided in FY 2010 will
provide the second year of support for the new research generated by FY 2009 funding.
NIH Campus Modernization
Recovery funding: $500 million
With more than 300 owned or leased facilities (some more than 50 years old) occupying more
than 17 million square feet of space, NIH has very substantial facilities needs. Excluding new
construction priorities identified in the NIH Master Plan, NIH estimates its FY 2009-2010
renovation and improvement (R and I) needs at nearly $1 billion. These funds would bring the
buildings' condition index to an acceptable level by the end of 2010. Funds will be spent
according to the R and I strategic plan developed by the NIH Office of Research Facilities for the
most urgent campus safety and functional repair needs.
Media Coverage
House $825 Billion Stimulus Has $275 Billion Tax Cut Bloomberg
Stimulus Bill Includes Billions of Dollars in Help for Students and Colleges The Chronicle of Higher Education
Subsidy-Rate Proposal in Bill Could Aid Lenders The Chronicle of Higher Education
Manna From Heaven (er, Washington) Inside Higher Ed
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