Economic Stimulus Bill Would Pump Billions Into Education - By: Jeff Mictabor

President Barack Obama is proposing an $825 billion economic stimulus bill that would include $140 billion — the largest increase in federal aid since World War II — to bolster the nation’s schools and help them stave off cuts to education programs.

“We cannot let our whole education system collapse as the economy falters,” says Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee. “Together, these investments will meet the most urgent challenges we face.”

Stimulus funds would be used to stave off teacher layoffs and education cuts in every state and to help schools at all levels, from K–12 to higher education, maintain or modernize aging facilities, with $6 billion earmarked specifically for higher education facility improvements.

Administration Targets Availability of College Federal Financial Aid and Student Loans

College federal work-study programs, which provide part-time jobs to undergraduate students as a means of financial aid, could get an additional $490 million in funding, while the most financially needy students could get as much as a $15 billion boost in federal financial aid through a propping up of the federal Pell Grant program.

The increase in Pell Grant funds would be used to eliminate the current funding shortage in the federal financial aid program that targets the most financially disadvantaged college students and to increase the maximum Pell Grant award by $500 in the hopes of helping an estimated 7 million students better afford a college education, reducing their need to rely on student loans to pay for school.

At the same time, for those families who may not qualify for grant assistance and who do need parent and student loans to help pay for college, the administration is seeking to include a measure meant to ensure that lenders providing federal college loans under the Federal Family Education Loan Program (FFELP) can continue making student loans by temporarily increasing their federal subsidies. Most FFELP lenders have suspended their federal student loan programs after Congress passed legislation in 2007 that cut over $21 billion in federal subsidies to these third-party lenders.

The proposed stimulus bill would also create the American Opportunity Tax Credit, a $2,500 credit available for four years of college that would be partially refundable.

Education Funding a Topic of Controversy in Economic Stimulus Bill

While both the House and the Senate have each proposed a version of a national economic stimulus bill, the two chambers cannot agree on just how much of the stimulus should be pumped into education or on the amount that should be allocated to various education programs.

The stimulus bill “ought to be oriented directly toward those items that would specifically create jobs now,” says Sen. Lamar Alexander, R-Tenn., former education secretary. “It should not go toward good-sounding ideas such as Head Start and Pell Grants for college students.”

Republicans argue that the Democrat-led stimulus bill recently approved by the House is filled with “wasteful spending” on education and that it should focus primarily on housing assistance and tax cuts instead, which they believe would do more to stimulate the sagging economy. Others question how pouring billions into education would lead to higher student achievement and what will happen to schools once they no longer have stimulus funds to fall back on.

The Senate is still working out the final details of the stimulus bill, a measure that The New York Times suggests “could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government.”

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