The American Recovery and Reinvestment Act, President Barack Obama’s new stimulus package, is the largest economic bailout plan the United States has ever seriously considered — and part of it will be used to support higher education.
In addition to helping the average U.S. citizen, according to economics professors at the College of William and Mary, the act will send ripples throughout the nation’s higher education system.
“The fact that [Congress] is trying to defy all history to get something this large passed this fast is astounding,” economics professor Robert Archibald said. “When you’re going to make major changes to the tax curve and spending, there’s all kinds of special interests that typically slow down the process.”
As of press time, the act had passed the House of Representatives and was awaiting a vote from the Senate.
A Senate vote may come as early as this Friday.
Archibald, an expert in higher education economics, predicted that Obama’s stimulus package could relieve state pressures to cut the College’s budget.
“The things that you hear talked about are aid for student loan money that could be useful for [College] students,” Archibald said. “The other thing that will have impact here is aid for states. That relieves pressure on [our] state budget, and maybe they won’t cut [the College’s budget] as much as they planned on.”
The plan will use expansionary fiscal policy that calls for tax cuts and government spending to stimulate aggregate demand. The goal is to lead the American economy toward full employment.
The exact framework of the package will only be revealed upon passage in the Senate and signing by Obama. This makes it difficult to predict the impacts on higher education.
Some aspects of the bill pertaining to higher education have already been outlined. The Pell Grant would be increased to $5,350 for the next academic year and another $200 added the year after.
However, Feldman stated that this aspect of the stimulus package would have little effect on the College.
“William and Mary is one of the schools that has the lowest Pell Grant pick-up rate in the nation,” Feldman said. “We don’t have the kinds of students that would benefit directly from this sort of program, but what it might mean is that we would be able to get more of them.”
Feldman also mentioned that income tax credits would be another aspect of the new stimulus package. The money saved would go toward educational expenses.
“In Obama’s bill, you can push your taxes into negative. The government hands you a check,” he said.
Overall, Feldman said that the Pell Grant boost and the tax credit scholarship would have minimal impact on College students.
In addition, Archibald said that the funds would be most effectively used when invested in campus infrastructure.
“Some of the potential aid is for building projects on [campuses], which is important for lasting effect,” Archibald said. “If they give money to build structures and they are around for 40 years, it is much different than paying professor’s salaries or student loans.”