Stimulus infuses funds for student grants, tax credits
By CC Times, Published February 20, 2009

Although the $789.5 billion stimulus package signed by President Barack Obama doesn’t included funds specifically to build and repair aging college facilities, its still provides a bounty for community colleges to help get the U.S. economy back on track through education and job training.

“The provisions of the bill represent the largest single federal investment in community colleges and our students in our lifetimes,” said George Boggs, president of the American Association of Community Colleges (AACC).

Topping the list for two-year colleges is that the law increases the maximum Pell Grant award by $500 in each of the next two fiscal years, up to $5,350 for the award year beginning July 1. 

“The massive infusion of Pell Grant funding is a red-letter achievement of the stimulus legislation,” AACC said in an analysis of the law, noting the increase will impact nearly 7 million projected recipients and bring more students into the program.

Community college students will also benefit from the revamped tax credit, which will temporarily replace the Hope Scholarship credit. The maximum tax credit will increase to $2,500, from $1,800, and fully cover of students’ first $2,000 of eligible expenses and 25 percent of the next $2,000. It is 40 percent refundable.

The credit extends eligible expenses to include course materials, which were excluded under previous tax-credit provisions.

“This new, albeit temporary, tax credit represents major breakthroughs for AACC’s longstanding agenda in the tax arena,” according to the AACC analysis. “The addition of course materials to eligible expenses means that hundreds of thousands, perhaps millions, of community college students will receive substantially greater benefits than they do now through the Hope tax credit.”

 Many students will receive a dollar-for-dollar reimbursement for their book and related course expenses through the credit, the analysis added. Another benefit is that the credit’s basic eligibility formula is tilted towards lower-priced colleges.

The law also provides $53.6 billion for “state fiscal stabilization.” About $40 billion will go to K-12 and public institutions of higher education, based on a formula. The formula provides public institutions with funding to bring them up to the higher of their fiscal year 2008 or 2009 state funding levels.

States must retain certain funding levels to qualify for funding. But the requirement may be waived.

States can use the funds for education, general expenditures and to modernize facilities at postsecondary institutions. They cannot be used for new facilities or to increase endowments.

AACC was disappointed the final legislation didn’t include funding specifically for much-needed construction and renovation projects, which proponent argued would have created jobs. Although it is currently unclear how much fiscal relief the additional funding for public institutions will provide, it should still be substantial for many campuses, the association noted, according to education advocates.

Job training is another area where community colleges will play a key role under the stimulus plan. The legislation provides $3.95 billion for training and employment services. The total includes substantial sums for the three Workforce Investment Act (WIA) Title I formula programs: $1.25 billion for dislocated workers, $500 million for adult workers and $1.2 billion for youth programs.

The bill also provides $750 million for a competitive grant program, $500 million of which is for research, labor exchange and job training projects to prepare workers for jobs in industries specified by the Green Jobs Act. The remaining $250 million will be prioritized for jobs in the health care sector.

“For the existing WIA Title I programs, these are large cash infusions that essentially amount to an extra year of funding,” AACC said in its analysis. “The new competitive grant program, which is not yet defined but which should greatly benefit community colleges, is equal to six annual competitions in the Community-Based Job Training Grants program.”

Local workforce investment boards (WIBs) are authorized to enter into contracts with higher education institutions or other eligible training providers if the local board determines that it would facilitate training for high-demand occupations.

While the provision was broadened at the last minute to include training providers outside of higher education, it still represents a great opportunity for community colleges to expand training capacity, according to AACC. Community colleges that are not already doing so should consult with their WIBs on possible training contracts.

The law also tweaks the Trade Adjustment Assistance (TAA) Act, which provides support to workers and firms affected by trade. Provisions of interest to community colleges include:

• Eligibility for the program, previously limited to workers and firms in manufacturing, now includes the service and public sectors.
• Funds available for training programs, previously capped at $220 million annually, will increase to $575 million.
• Clarification that workers may use their benefits to pursue degree programs at higher education institutions.

A new “TAA for Communities” section that includes a $40-million competitive grant program for training programs at community colleges and other educational institutions. In addition, it establishes a $40 million sector partnership program for which community colleges would also be eligible.

Higher education advocates are now looking to the president’s budget proposal for the next fiscal year, which he may release this week. Education advocates say they don’t expect many increases, given the increases provided in the stimulus package.

Stimulus bill resources

For the full conference report, visit http://www.rules.house.gov/bills_details.aspx?NewsID=4149.

For updates on analysis of the bill, visit www.aacc.nche.edu.

The U.S. Department of Education is providing updates on the stimulus law at www.ed.gov/policy/gen/leg/recovery, including state-by-state allocations for formula-based programs.

The White House has launched www.recovery.gov that will detail how, when and when stimulus funds are spent.