The $1.9 trillion American Rescue Plan Act, signed by President Joe Biden on Thursday, provides students with immediate and long-lasting financial benefits, including:
- Relief checks, even for dependent students.
- Emergency financial aid grants from their schools.
- Child tax credits for students who have children.
Students were largely left out of earlier relief bills. Connel Fullenkamp, an economics professor at Duke University, says that’s because students are overlooked by politicians.
Fullenkamp says he thinks the latest relief package could have a significant and much-needed impact on students. “We are not going to pay their tuition, but we can help defray some of the costs of living,” Fullenkamp adds.
Here are the details on what college students can expect from the relief package.
In previous relief legislation, there was an age cutoff. Students 17 or older who were claimed as dependents didn’t qualify for a payment, which left out many high school seniors and college students. This time, they qualify; the money goes to the taxpayer who claims them.
If someone else claims you on their taxes, you are eligible for the same payment the filer gets. All household members included on a qualifying tax return get a check of up to $1,400. If you are a dependent, the person who claimed you will receive payment on your behalf.
The maximum you can receive is $1,400, but the amount will gradually decrease with higher incomes. Those with reported incomes of more than $75,000 for individuals, $112,500 for head of household and $150,000 for joint filers will receive diminished checks. If the person who claimed you makes more than the qualifying maximum, you won’t get a payment at all.
Independent students qualified for earlier relief, and do so again.
If you have a Social Security number, file your taxes independently and have an adjusted gross income of $80,000 or less — which is the qualifying maximum — you are eligible for payment. That adjusted gross income maximum increases depending on your filing status — $120,000 if you file head of household and $160,000 if you file jointly. Income totals are based on your 2019 or 2020 tax refund.
If you file independently, you will receive payment in the same manner you receive your tax refund, via direct deposit or physical check.
Checks are expected to start rolling out this month.
The relief package provides nearly $40 billion in funding to colleges and universities. They’re required to spend half on students in the form of emergency financial aid grants to be distributed through Sept. 30, 2023.
It’s the largest pot of money allotted to students yet. In the original Coronavirus Aid, Relief and Economic Security Act, schools received $14 billion, while the second relief package provided $22.7 billion to colleges. Both packages required colleges to use half on grants for students.
The amount a school receives is based on factors around the numbers of Pell Grant recipients enrolled. Delivery of the emergency aid into students’ hands was largely left up to schools to decide. Some sent money to students automatically based on their eligibility for need-based aid. Other schools required students to apply for it.
What remains unclear is if this time the aid will be accessible to students with Deferred Action for Childhood Arrivals, or DACA, status and international students. Megan Coval, vice president of policy and federal relations at the National Association of Student Financial Aid Administrators says she expects the Department of Education to issue guidance on this in the coming weeks.
As part of the relief bill, parents will receive up to $3,600 a year per child through the child tax credit. Though there is support to make this credit permanent, this new provision is set to last only a year.
“Hopefully it’s going to keep some people afloat in terms of being able to continue their education and not have to stop out,” says Douglas Webber, associate professor of economics at Temple University. “Once you stop out it’s just so hard to come back.”
Lawmakers intend to distribute the sum through monthly checks starting in July. With this arrangement, parents will receive $300 per child for children below age 6 and $250 per month for children between 6 and 17. The remaining credit will pay out after you file taxes.
Unlike with the previous child tax credit, this one is fully refundable. That means even families without a tax obligation will qualify. But payments will phase out for those with a reported income of more than $75,000 for individuals, $112,500 for head of household and $150,000 for joint filers.
Like other measures in the relief bill, payments are based on your most recent tax return — 2019 or 2020.
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The article This Time, the Stimulus Package Helps More College Students originally appeared on NerdWallet.