May 1, 2009
Financing college is becoming a little easier, thanks to the 2009 economic stimulus bill. For 2009 and 2010 – perhaps longer, pending Congressional approval – several education assistance programs are being expanded by hundreds of millions of dollars.
Here are highlights:
Pell Grant increases. The maximum annual amount for Pell Grants (free scholarships for lower-income students) increases from $4,731 to $5,350 in 2009. Congress is considering President Obama's proposal to further boost the maximum to $5,500 next year.
Pell Grants needn't be repaid and can be used for tuition, books and living expenses while enrolled at a participating institution. To apply, you'll need to complete the Free Application for Federal Student Aid (FAFSA) form at www.fafsa.ed.gov. Note that the federal deadline for FAFSA submission for the 2009-2010 school year is June 30, 2009.
New tax credit. The Hope Scholarship, an educational tax credit that reduces a student's or family's tax liability, is being replaced in 2009 and 2010 by the more robust American Opportunity Tax Credit. Enhancements include:
Federal Work Study Program expansion. About $200 million has been added to this program, which provides on-campus part-time jobs to students. Eligibility is determined by information provided in the FAFSA.
Financing computers. Tax-free withdrawals from 529 College Savings Plans are now allowed for computers, in addition to tuition, room and board, and books.
Many people turn to loans when grants, scholarships and tax credits can't cover all college-related costs. Government-sponsored loans include:
Privately sponsored loans, including those from Sallie Mae, banks and other lenders are also available, but may have higher rates and different terms, so investigate your government-sponsored options first.
Thanks to these stimulus bill enhancements, financing a college education will be eased for millions more Americans.
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