The U.S. House Appropriations Committee has released its proposal for the economic stimulus package, the American Recovery and Reinvestment Bill of 2009. The proposal involves $550 billion in new spending combined with $275 billion in tax cuts. Congress will be deliberating this proposal during the next couple of weeks, and it is unclear whether the Senate will present its own stimulus plan.

The proposed stimulus package includes several strategies – backed by financial resources – for leveraging the economic impact potential of higher education, through greater student access and affordability, workforce training, infrastructure improvement, and increased funding for scientific research and development. The bill proposes an increase in Pell Grant and Federal Work-Study programs, a new partially refundable tax credit, and an investment of $6 billion for construction and renovation at higher education institutions. Further, significant monies are allocated to states to help them address critical funding shortages, with a requirement that higher education be funded minimally at 2008 levels.

Pell Grants: $15.6 billion to increase the maximum Pell Grant by $500, from $4,850 to $5,350 for 2009-10. The current Pell maximum is $4,731. The increased funding will aid up to 800,000 more students and eliminate a $1.4 billion estimated shortfall in the program through 2010-2011.

New Tax Credit: $12.5 billion to replace the current Hope tax credit with a $2,500 annual tax credit, of which 40% would be refundable, allowing students from families that have incomes too low to pay federal income taxes to receive up to a $1,000 refund. The tax credit would also cover textbooks and other course materials.

Student Loan Limit Increase: Increases the limit on how much undergraduates can borrow in unsubsidized Stafford Loans by $2,000 annually, and up to an aggregate amount of $8,000.

Student Aid Administration: $50 million to help the Department of Education administer surging student aid programs while navigating the changing student loan environment.

Statewide Data Systems: $250 million for competitive grants to states to design and develop data systems that analyze individual student data to find ways to improve student achievement, providing teachers and administrators with effective tools.

Improving Teacher Quality: $300 million, including $200 million for competitive grants to school districts and states to provide financial incentives for teachers and principals who raise student achievement and close the achievement gaps in high-need schools and $100 million for competitive grants to states to address teacher shortages and modernize the teaching workforce.

A critical component of the bill involves $39 billion for states to address funding shortfalls in critical education programs at all levels: elementary, secondary and post-secondary. While it is uncertain what proportion will be distributed to public elementary and secondary schools as opposed to public two- and four-year institutions, the proposed legislation calls on governors to “provide the amount of funds to public institutions in the state that is needed to restore state support for postsecondary education to the fiscal year 2008 level.” Another $25 billion is proposed for states to address other high-priority needs, which could include education.

The bill calls for $6 billion for higher education renovation and modernization, including technology upgrades and energy efficiency improvements, to be distributed to states in proportion to their share of full-time undergraduates. The funds are to be designated for health and safety repairs, facility modifications to provide access for disabled students and educational technology infrastructure upgrades as well as energy efficiency projects. Priority will be given to colleges that serve high numbers of minority students and institutions impacted by major disasters as well as institutions seeking to undertake energy efficiency renovations. The legislation also calls for $300 million in grants for the construction of science and research buildings at colleges and other research organizations.

Significant monies are allocated for science and research, with a strong focus on alternative and renewable energy development and energy efficiency. This includes $11 billion for smart electrical grid development, $2 billion for energy efficiency and renewable energy, $1.5 billion for energy efficiency grants and loans for K-12 and higher education and $1.9 billion in basic energy studies.

Additional funding is included for research for the federal agencies. A portion of this includes $3 billion for the NSF (including $2 billion for research programs, $400 million for major research facilities, $300 million for major research equipment, and $200 for infrastructure); $3 billion for the NIH (including $1.5 billion for research programs, $500 million for university research facilities); and $1.9 billion for the Dept. of Energy.