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Expanded college financing part of federal stimulus package

Wednesday, February 25, 2009 | 8:04 p.m. CST

COLUMBIA — Funds earmarked for higher education in the federal stimulus package will put money directly into the pockets of college students and their families, according to the Missouri Department of Higher Education.

How to take advantage of these programs

Federal and state financial aid is waiting for you to grab your share.

Three ways to register for the FAFSA:

1.    Call the US Dept. of Education at 1-800-4-FED-AID.

2.    Pick up a copy at your local college or high school.

3.    Register online at fafsa.ed.gov. ← This is the preferred way.

Enroll in a MOST account:

missourimost.s.upromise.com



Three existing programs have been tagged for more funding over the next two years:

• Stimulus funds are adding $17 billion to the national Pell Grant program, which gives need-based grants to low-income families and students.

• Families participating in Missouri’s 529 college savings plan now can use money from the program for computers and computer technology, in addition to tuition, room and board, books, and other college expenses.

• Higher education tax credits will increase to a maximum of $2,500 per student for tuition and related expenses.

In the current year, the maximum amount for a Pell Grant is $4,731. That amount jumps to $5,350 for 2009-2010 and $5,550 for 2010-2011, according to a summary from the office of House Speaker Nancy Pelosi.

In the 2007-2008 school year, more than 3,500 MU students benefited from the program. Some experts, like Paul Rivers, expect more families to benefit now.

“The economy has shifted, and if parents are out of work, their incomes are lower, which increases their chance of getting the Pell Grant,” said Rivers, a financial aid strategist for Sources for Students.

Paul Wagner, deputy commissioner of the Missouri Department of Higher Education, predicts individual Pell grants will be larger as well.

“Any student receiving a Pell Grant will get more money from that,” Wagner said.

This is especially good news for students like sophomore Calley McGuirk who was unsure how the present economic situation would impact her financial aid package.

“I've had friends mention that Mizzou students wouldn't receive as much aid in upcoming semesters and tuition might increase,” McGuirk, 19, said. "But you can't always believe what you hear.”

McGuirk and her mother even discussed alternate schools as a backup plan should tuition increase at MU.

“This has been a big deal since the day I made my decision to go here, due almost entirely to the cost,” McGuirk said.

Now she can breathe a sigh of relief at the news that she can get more Pell Grant money for her final two undergraduate years.

“That's the best news I've heard since I started going here,” she said.

Students may be considered for a Pell Grant by filling out the FAFSA, the Free Application for Student Aid. The application deadline for the FAFSA at MU is March 1. Eligibility rules have not changed. The amount of a grant, which does not have to be repaid, is determined by factors such as family income and the cost of tuition. 

Tax credits for college students now will cover 100 percent of the first $2,000 of college-related expenses and 25 percent of the next $2,000 in 2009 and 2010. The maximum tax credit goes up from $1,800 to $2,500 per year for tuition and additional costs.

Forty percent of it is non-wasteable tax credit, which could reduce the amount of taxes a family owes below zero, resulting in a refund. The provision also extends the definition of qualified expenses to include required course materials. The credit applies to families making a combined income of less than $160,000.

The 529 college savings plan program allows families or students to save for college expenses. It offers different levels of plans based on how long the money will be saved with varying portions of stocks, bonds and short-term savings. The program allows savers to invest as little as $25 per deposit or $15 as a payroll direct deposit.

Families involved in Missouri’s 529 college savings plan now can use withdrawals for technology expenses that include computers, educational software and Internet service for students living at home.

The savings plan can be paired with the Upromise program, which connects daily shopping to college savings. Retail, grocery and drug stores, along with more than 8,000 restaurants nationwide, return a portion of the money from each sale that is then held in a Upromise account until the purchaser is ready to invest in a 529 plan. Major chains including Target, Apple, Best Buy and Nike participate in the program through their online sales.

The stimulus plan is contributing an additional $200 million to the work-study program allowing students to make more money per semester.

All improvements to financial aid apply only for the 2009-2010 period stipulated in the stimulus plan.

“This is just a one-time shot of money,” Wagner said.

 


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