Biden signs 1.9 trillion American Rescue Plan into law
President Biden on Thursday signed the American Rescue Plan Act, H.R. 1319, passed by the House by a 220-211 vote. Biden had been expected to sign the bill on Friday but moved up the action by a day.
The legislation includes nearly $40 billion for colleges and universities, including nearly $3 billion in set-aside funding for Historically Black Colleges and Universities (HBCUs), Tribal Colleges and Universities (TCUs), and Minority Serving Institutions (MSIs).
In addition to the $3 billion in set-aside funding for HBCUs, TCUs and MSIs, the additional American Rescue Plan education components include:
- $40 billion for institutions of higher education to help make up for lost revenue due to the pandemic. Requires institutions to dedicate at least half of their funding for emergency financial aid grants to students to help prevent hunger, homelessness and other hardships facing students as a result of the pandemic.
- Assures any future student loan forgiveness passed between December 2020 and January 2026 will not be taxable income.
- $7.1 billion to reimburse schools and libraries – central points for connectivity in many communities – to purchase equipment such as hotspots, internet service, and computers on behalf of students and patrons. This equipment is essential for students when in-person classes resume, and for hybrid and remote learning.
- Ensures schools and libraries can quickly access the critical funding by relying on the Federal Communications Commission and its E-rate program to administer the funds equitably.
The American Rescue Plan also benefits college students by including larger stimulus checks of $1,400 for individuals making less than $75,000, increased unemployment aid of $300 per week through Sept. 6, and makes the first $10,200 in unemployment benefits tax-free in 2020 for households making less than $150,000 per year.
The $39.5 billion will be distributed to public and private institutions. Colleges and universities are required to spend at least half of the money on emergency grants to students.
According to CNBC, a significant provision making any student loan forgiveness tax-free is included in the bill. Currently, any student loan canceled by the government can be considered taxable at their current tax rate.
For example, if someone earns $50,000 a year, and was at a 22% tax rate, and received $30,000 in student loan forgiveness, they might be slapped with a $6,600 bill from the IRS.
Soon, borrowers may be off the hook from these payments. The provision would last through 2025, but it could be extended or become permanent.
The aid for higher education surpasses the $14 billion institutions received in the CARES Act last March and the $22.7 billion they received in December’s $900 billion relief package.
—Charles Hendrix covers education funding and other Title I issues for LRP Publications.