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A few details on the Obama Stimulus and Student Loans

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by Randy Schmidt

While it has not been announced yet early indications from the Obama administration show the new stimulus package will have something for the financial aid community.  However, many of the proposed provisions are similar to several already making the rounds in Congress.  The significant components include increases in the Pell grant and Stafford Loan limits. Also, it’s likely that an Obama stimulus plan would contain an education tax credit in the $2500 range.   

 

The current Congressional proposal offers to increase the maximum Pell Grant by $500, from $4,360 to $4,860.  This increase combined with previous increases would bring the maximum award to $5,350.  Such an increase would add nearly 1 million students to the program and expand its reach to nearly 7 million students total.  The proposed Pell Grant bill would also serve to eradicate the existing funding shortfalls in the program.  Several student and college groups are lobbying the Senate to increase the grant even further by perhaps $750. 
 
Also, included in this House proposal and also a likely component of an Obama stimulus is an increase in the Stafford Loan limits.  Interestingly, such an increase would be the second such increase in less than five years.  The last previous increase was nearly three presidential administrations ago.  The proposed $2,000 increase is limited to the unsubsidized Stafford Loan.
 
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