Managing Finances

How the American Recovery and Reinvestment Act will impact Higher Education

Previous versions of the recently passed American Recovery and Reinvestment Act, also known as the stimulus package, had indicated it would pour billions of dollars into higher education. Unfortunately for those in favor of the infusion, the final version of the legislation passed by Congress was somewhat less generous to colleges and students.

The original version of the stimulus package passed by the U.S. House had $79 billion in funding for education. The version of the bill that the Senate then approved lowered it to $39 billion, by eliminating the funding for education-related capital investment projects. After last minute negotiations, $10 billion was added to the money going to states with the understanding that it could be used to fix deteriorating schools. Some assistance for students, for example, the provision that would’ve increased borrowing limits for federal student loans and funds for Perkins Loans, was dropped from the final legislation.

Ultimately, congressional leaders compromised — and the final legislation will deliver a total of $53.6 billion in new education aid to states over the next two years. Of the $53.6 billion — $39.6 billion of which is designed to fill gaps left by state budget cuts and $8.8 billion of which is set to go to governors to use for education and other purposes. Despite the reductions, the Chronicle of Higher Education determined in a recent analysis that the final package “should go a significant way toward softening the impact of the economic downturn on state colleges and universities.”

The opinions of congressional leaders varied greatly — largely based on party affiliation, considering only three republican Senators broke party line and supported the stimulus.

In speeches and television appearances taped the weekend of January 25th, weeks before the final vote, Representative John Boehner, R- Ohio, criticized the stimulus package for greatly emphasizing spending that may or may not spark the economy rather than tax breaks that would put money directly into consumers’ and businesses’ pockets. Boehner specifically singled out aid for education in his criticism. “Providing $300 billion of this package to states — $166 billion in direct aid to the states, another $140 billion in education funding — this is not going to do anything, anything to stimulate our economy, to help the — our ailing economy,” the Ohio Representative said on NBC’s “Meet the Press.”

Expressing his support for the package, Congressman Dave Loebsack, D- Iowa, in a statement released by his office explained that “education is the cornerstone of building our economy. By investing in our students, we reap unending benefits. It is through greater investment in education, infrastructure, and science and technology that we can get our economy moving while promoting long term economic growth. Investments to make college more affordable will aid our students and their families.”

Regardless of how your congressional leader voted on the stimulus package — it doesn’t seem anyone is going to say “no” to the money. According to a report on, nine GOP House members from Florida, who all voted “no” on the stimulus, joined nine of their Democratic colleagues, who all voted “yes”, in asking the federal government to grant a waiver giving them access to hundreds of millions in state stabilization stimulus money.

“This critical funding is vital to protecting our schools from budget cuts and teacher layoffs. Because Florida has been hit especially hard by a rise in foreclosures, unemployment, and recent natural disasters, we are experiencing a crippling budget crisis. Now more than ever, we must invest in our state’s future,” stated the letter signed by the eighteen Florida representatives.

Doug Lederman, in an article posted on the Chronicle for Higher Education website on February 13th, provided the most detailed breakdown of how the education spending in the stimulus package is allocated. Click here to review the breakdown.


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