Money for College: Stimulus Package Eases Higher Education Costs

March 2, 11:11 AMCollege Admissions ExaminerLauren Starkey

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Although the American Recovery and Reinvestment Act of 2009 was signed into law by President Obama over a week ago, it’s taken some time to sift through the details and determine exactly how it will benefit those paying for higher education. Much has been written about these various provisions, complete with a range of wrong information (especially beware of anything written before the Bill was signed). Here’s the current lowdown on the three important benefits:

·         Pell Grant: the maximum for these need-based grants will increase by $500 to $5,350 per student for the 2009-2010 year, and to $5550 for the 2010-2011 year.

·         Tax Credit: for college expenses in 2009 and 2010, the Hope Tax Credit will be replaced by the American Opportunity Tax Credit.  Individuals making less than $80,000 and families making less than $160,000 are eligible for the credit, which has doubled; it covers up to $2,500 of tuition and related expenses for 2009 and 2010. To get the full amount, you must spend at least $4,000 each year; 40% of that is refundable.

·         529 Plan Expansion: the money you withdraw from a 529 college savings plan can be used for pre-determined expenses such as tuition, room, board, and books. In 2009 and 2010, the money can also be used for computers and computer technology, including educational software and Internet service.