Durbin: Recovery Act Includes Increase for Pell Grants to Aid Struggling Students

Press Release

U.S. Senator Dick Durbin (D-IL) today told college students and parents of college-bound high school students that increased funding for Pell Grants is included in the American Reinvestment and Recovery Act (ARRA) to help supplement the cost of higher education. Pell Grants currently help more than 200,000 students in Illinois pay for college and the increase will provide $655 million in aid to Illinois students. The Senate-passed 2010 budget also includes increased higher education funding.

"Illinois families are struggling with lost jobs and financial uncertainty in today's weak economy," Durbin said. These tough times make it harder for students to afford a college education. The increase in Pell Grant funding will help ease the burden faced by students and their families.

"Since 2000, the average cost of tuition at a public four-year college has increased 29 percent—far outpacing inflation and growth in income. Federal financial aid has not kept pace. Thirty years ago, a Pell Grant could cover 77 percent of public college costs. Today, it covers 30 percent. To fill in the gap, more students have taken out student loans to afford college. In the early 1990s, not quite 1/3 of college graduates had loan debt. Now, more than 70 percent do, at an average of over $20,000 per student.

Unemployment increased in every metropolitan area in Illinois in February and the statewide average for February is 8.6 percent —the highest it's been since December 1991 and higher than the national rate of 8.1 percent. Illinois is losing 730 jobs every day and lost jobs and financial uncertainty have touched families across Illinois, especially families with kids going to college.

Over the past few months, Congress has tried to ease the burden. In February, Congress passed the ARRA to help jumpstart our economy. The ARRA included $15.6 billion to increase the maximum Pell Grant, meaning students can qualify for a grant up to $5,350 in the 2009-2010 school year and $5,550 the following year. The budget the Senate passed this week maintains that $5,550 Pell increase and creates a reserve fund to allow for the consideration of the President's plan to reform the student loan system and index the Pell Grant to inflation so that it will continue to rise—bringing us closer to narrowing the gap between the value of a Pell Grant and the cost of higher education.

"Placing increased resources in education now provides a boost to our economy and acts as an investment in our nation's economic future," Durbin said.The budget for fiscal year 2010 also makes the American Opportunity Tax Credit permanent. Enacted as part of the economic recovery package, it provides a $2,500 credit for higher education, which will be partially refundable. In Illinois, 156,000 additional students and families will qualify for that tax credit.

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