The Senate on March 6 passed its version of a relief package with $39.5 billion for higher education, including financial assistance to millions of college students in the form of grants.
The 50-49 party-line vote sends the amended legislation back to the House for final approval as legislators work to meet a March 14 deadline for final passage and signature of the bill into law.
As passed by the Senate, the American Rescue Plan would also benefit college students by including larger stimulus checks of $1,400, 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 would surpass 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.
The House is expected to pass the measure — which contains the largest infusion of help to higher education approved by Congress during the pandemic — as soon as Tuesday, sending it to President Biden for his signature.
More from UB