Stimulus to impact federal grant amounts

By Kelly Berger

UK students receiving financial aid may see an increase in the amount they get next year as a result of the stimulus package passed in the nation’s capital earlier this year.

Linda George, UK’s director of financial aid, said two major changes will take place.

There will be $200 million in funding distributed to universities nationwide, UK being one of them, although there’s no way to know how much UK will receive right now, George said.

Also, anyone receiving the maximum Pell Grant will see a significant increase in their funding, she said.

The maximum Pell Grant is targeted at low- and moderate-income families. Sue Patrick, the spokeswoman for the Council of Postsecondary Education, said the current maximum for the 2008-09 school year is $4,731. That will go up to $5,350 in the 2009-10 school year, and $5,550 in 2010-11 school year.

It’s also estimated that the additional federal Pell Grants to Kentucky students will total over $100 million in both the 2010 and 2011 fiscal years.

Students may also be eligible for the Hope Credit education tax credit. Patrick said, this is available when you file your income taxes and will now be called the American Opportunity Tax Credit.

The allowable credit increases to a maximum of $2,500 per eligible student, per year for qualified tuition and related expenses paid for each of the first four years of the student’s postsecondary education in a degree or certificate program.

It also allows that 40 percent of the credit to be refundable for those low-income students who end up having no tax liability which equates to $1,000.

John Hayek, interim vice president for finance on the Council on Postsecondary Education, said nationally, it is estimated a third of eligible families don’t take advantage of these important tax credits.

Students will know if they’ve been affected by the new stimulus package by applying for Free Applications for Federal Student Aid as early as possible.

Filling out the form sooner will ensure that, if eligible, students can receive the Pell Grants, as well as state need-based grants, which are given on a first come, first serve basis and typically run out of money by February or March of each year for the following fall.

Taking advantage of federal and state work-study programs on campus is another way students can stay engaged and be eligible, Hayek said.

Another way to help protect your funds is, “to be as frugal as possible in terms of living expenses and only take out loans that are absolutely necessary for essential costs,” Hayek said.

“Too many students take out loans for convenience and end up regretting it when they have to pay these loans back upon graduation,” he said.