As Congress moves closer to passing a more than $800 billion economic stimulus package, the war of words about the bill is intensifying. Democrats and Republicans are scrambling to convince anyone who will listen about how they think the bill will affect education and the country in general. The difference of opinion between Republicans and Democrats is obvious.

This article reviews some facts about the package and looks at talking points distributed by both parties.

First, the facts about the package:

• Contains approximately $140 billion in federal funding for education-related purposes.

• Provides significant increases for the maximum Pell.

• The package includes a $2,500 tax credit for college students

Democrats and Republicans view the stimulus plan in very different ways. Their fundamentally opposing political philosophies are revealed in the circulating talking points concerning the bill.

Republicans say

• The majority of the education-related provisions in S. 336 would not actually stimulate the economy.

• The education funding in S. 336 is likely to be permanent and would establish a new baseline for education funding. This will allow Democrats to continue to make the argument that federal education programs are "underfunded" and serve as a justification for spending more and more taxpayer money on unnecessary programs each year.

• Massive increases in federal education spending are not tied to reforms of the education system and do not help ensure that students are better prepared to compete in a 21st century economy.

• It also creates tremendously burdensome requirements that will hamper the ability of local school districts to respond to the needs of students.

• The federal government should not play the role of "big brother" and attempt to shield states and districts from the difficult decisions that come with changing economic times.

• States and local school districts must make realistic decisions on how to fund education within the constraints of their individual budgets. "It's like an alcoholic at the end of the night when the bars close, and the solution is to open the bar for another hour."

• This is the first meaningful increase in the Pell Grant in years. Leading economists agree that investments in human capital are critical to creating a well-educated, innovative workforce and a meaningful economic recovery on a national level.
  "Education helps a society leverage every other investment it makes, be it in medicine, transportation or alternative energy. Education -- educating more people and educating them better -- appears to be the best single bet that a society can make," writes David Leonhardt, economics columnist, The New York Times

• Some critics of this Pell Grant increase are questioning its inclusion, arguing that boosting student aid does not yield immediate economic benefits. They have not provided evidence to back up this claim. Each year, the University of Houston system generates over $3 billion in local economic activity and 24,000 local jobs. In 2003-2004, the total estimated economic impact of spending by Pennsylvania's 14 state-owned regional public universities was $4.47 billion; each of these schools provided an average of 3,592 jobs. Colleges and universities in the Atlanta area supply 130,000 jobs and contribute $10.8 billion annually to the state's economy.

• This investment builds on a key priority for the Democratic Congress - making college more affordable and accessible for students who need it most.
  "It's our human capital that's in short supply. And without adequate public funding, the supply will shrink further. I'm not saying funding is everything, but without it we can't attract talented people into teaching, keep classrooms small and give our kids a well-rounded curriculum, and ensure that every qualified young person can go to college..." said Robert Reich on Marketplace Radio.

• States and communities across the country rely heavily on the income and benefits derived from colleges and universities. College and universities create jobs, support taxes and generate spending on goods and services. Increasing the Pell Grant scholarship will help more students stay in college, and more new students enroll in college - which in turn will help colleges and universities keep more jobs on the payroll and continue to serve as local economic engines. Numerous studies illustrate these benefits.

• The presence of education institutions in a metropolitan area makes area residents more likely to earn college degrees and remain in the area to work. In addition, students who come to the area from elsewhere are more likely to remain in the area to work after completing their degrees. In this way, expanding education increases the percentage of a metropolitan area's residents who have college degrees and, therefore, increases earnings.

• Recent studies show that the Pell Grant scholarship is playing an increasingly important role in expanding college access for low-income students. In FY 2006, almost 75 percent of students receiving the Pell Grant had family incomes below $30,000.

• According to a 2007 study by the College Board, college graduates earn 60 percent more over their lifetime than high school graduates; are 70 percent more likely to receive a pension from their employer; and are more likely to have employer-provided health insurance. A college degree yields higher incomes and greater purchasing power, which in turn inject more spending and tax revenue directly into the economy. These are all key ingredients for a sustainable economic recovery.

By Duane Van Bergen
NASFAA Communications Assistant

Posted 02/06/09 to www.NASFAA.org. Redistribution to non-NASFAA institutions is prohibited. Please submit Web Site questions or comments to Web@NASFAA.org.