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The Stimulus Bill: Winners Large and Small

As the dust begins to clear on Congress’ stimulus bill, it’s clear there are some big winners, some smaller winners and only a few left out in the cold under the compromise legislation totaling $789 billion.

The package has more than $100 billion for education, including $15 billion to bolster the Pell Grant program through a $500 increase in the maximum grant for needy students. Almost as significant for many students is a two-year American Opportunity Tax Credit, which will provide many low- and middle-income families with a $2,500 annual credit to offset college costs. This credit will be more generous than the current $1,500 credit available through the HOPE Scholarship.

Still, some members of the House of Representatives had wanted even more for K-12 and higher education, only to see those efforts beaten back by Senate moderates.

“A plan of this size was not easy to navigate, and it is not perfect,” said Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee. “But I believe it’s the best possible plan that could be reached swiftly, under challenging circumstances. As the bill moves toward a final vote, here is a look at some of the winners.”

The Big Winners

Low-income students: The $500 Pell increase is the best-possible scenario, since the Senate initially had proposed increases of no more than $400 during the next two years.

The new opportunity tax credit also has a helpful provision: Low-income students and families can get a partially refundable credit – up to 40 percent of the total – even if they have little or no tax liability. That’s huge, says Angela Peoples, legislative director of the United States Student Association, which has advocated the approach since the start of the debate.

“Partial refundability is great,” she says. “That’s new for higher education.”

Pipeline programs: Core initiatives for low-income children such as Title I and Head Start will get significant bumps, a move that may help millions of future college students. Title I will receive $13 billion in new funding with an eye toward reducing achievement gaps, and special education will get an additional $12 billion. Head Start will get $2 billion – $1 billion for its preschool component and $1 billion for its infant/toddler component, Early Head Start. President Barack Obama has identified early childhood education as a key priority to promote long-term achievement, and the new funds will support 124,000 youngsters.

States and school districts: The final package has $56 billion in “budget stabilization” funds that may help states and localities stave off some painful budget cuts. Given that many of these budgets fund school districts and public universities, the money may keep many programs alive and prevent cuts in others.

This figure is down significantly from the House-passed bill, which had $79 billion to help state and local budgets. In addition, some of the new funds have conditions. Of the $56 billion, $5 billion is available only as bonuses for school districts that meet high-performance targets.

Job training programs: With unemployment rising, community colleges and others will see a spike in the number of individuals coming back for job-related training programs. The bill has $3.95 billion in additional funding for adult and youth programs, including $1.2 billion to create an estimated 1 million summer jobs for youth.

Science: The final package includes $8.5 billion for the National Institutes of Health and the $3 billion for research activities at the National Science Foundation. “The bill restores science and innovation,” says Rep. James Clyburn, D-S.C., an African-American lawmaker who serves in the House leadership.

Smaller Winners

Colleges and university facilities: A proposed $6 billion fund for construction of higher education facilities did not survive the negotiations, as Senate GOP moderates opposed that plan. Lawmakers also scaled back the House’s proposed $14 billion fund for K-12 construction. In place of both initiatives is a pool of $8.8 billion for states to use for “high-priority needs” and “other critical services,” according to congressional staff. These funds can include public safety as well as modernization and repairs to K-12 schools and higher education facilities.

This language proved to be among the most contentious in the final House/Senate negotiations, as some Democratic and Republican moderates wanted an emphasis on “modernization” rather than “construction,” believing that smaller repair projects would start and finish more quickly than more expensive new construction initiatives.

Education Technology: Some college students may find it easier to buy computers, since the bill will allow owners of the popular 529 Education Plans to spend proceeds on the costs of computer technology. Students and parents already can put these funds toward tuition, fees, books as well as room and board.

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