The stimulus package will significantly augment spending for higher education by enhancing financial aid, expanding work-study programs and creating a new tuition tax credit. The federal law will provide students with the following additional financial assistance for student expenses.
Maximum Pell Grant benefits will increase from $4,850 to $5,350 for 2009-10
The package would create a tax credit of $2,500, up from $1,800. Students and parents may be able to claim a credit against their federal taxes that could increase their federal tax refund. Eligible expenses would include books and other course materials. Currently, only tuition and fees are eleigible expenses.
These new tax credit provisions are specific to tax years 2009-10 for the first four years of post-secondary education and are subject to phase out for taxpayers with the adjusted gross incomes in excess of $80,000 ($160,000 for married couples filing jointly).
The tax credit could be taken when filing federal taxes for the year in which the student was enrolled in college.
Student employment will be assisted by the addition of $200 million in funding to the Federal Work-Study Program, a program that provides jobs to students for their educational expenses. Federal Work-Study jobs will be made available by the student's school.
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