Students and administrators across Chicago are happy about two provisions in the federal economic stimulus bill slated to be signed into law tomorrow.
Federal Pell grants are increasing by $500 this year and students will be able to claim a larger tuition tax credit under the stimulus package.
Mark Kantrowitz, a financial aid expert who runs the Website finaid.org, says the increase in the Pell Grant program is the largest boost, in terms of dollar amounts, since the program was created in 1972.
“Anytime the Congress increases student aid, it helps students,” he says.
While the increases are welcome news, there are no assurances they’ll last for more than a year.
“This is a one-year increase in the Pell Grant and one wonders what’s going to happen in the year after,” he says.
A tax credit known as the Hope Scholarship is also increasing, from $1,800 per year to $2,500 per year.
While the increases are relatively modest, they come at a time when students and families are having more difficulty meeting mounting bills for higher education.
“I get the Pell Grant and I know as a member of the student government at Loyola, there’s a lot of concern among students about the economy’s effect on families,” says Xavier Chen, a junior math and business major at Loyola University.
Pell Grants can be an important boost for low-income students who wouldn’t otherwise be able to afford the cost of tuition at many colleges and universities. The grants are competitive and based solely on financial need. Since they don’t need to be repaid, they’re often a better option than federal student loans.
“For a low income student, a loan is something to be feared,” Kantrowitz says. “On an emotional level, a loan is something that if you’re told you have to borrow to pay for your education, you’re not going to pursue it.”
Previously, the most a student could receive in Pell Grants for a year was $4,850. The new maximum is now $5,350.
“$Five-hundred dollars, that’s like your textbooks,” Chen says. “Textbooks are pretty expensive.”
Thousands of students across Chicago receive Pell grants. A third of DePaul University students got them last year, as did about a third of students at Roosevelt University. The size of the grant varies for each student, but is often at least $2,000.
While the changes undoubtedly will help some students, the increases in both Pell grants and the tax credits raise some concerns for Kantrowitz.
“There was nothing included in the legislation to allow families to get an advance on the tax credit, so it’s not coming when people are paying the bills,” Kantrowitz says. “It’s coming after the fact.”
Chen says confusion like that won’t affect his family as much because they can afford to hire a tax accountant. But some of his friends don’t have that benefit.
“Maybe if they advertise it to students ... and make it easy,” Chen says, that would reduce confusion over the tax credit.
Daily News Staff Writer Peter Sachs covers higher education. He can be reached at 773.362.5002, ext. 18