In the waning days of December 2015, Congress successfully passed an omnibus tax and spending bill that ignored the mandatory cuts in discretionary spending included in earlier bills this summer, resulting in significant increases for many programs important to students and colleges.
Under the FY 2015-16 budget agreement signed by President Obama on December 18, the maximum Pell Grant will rise to $5,915 for the 2016-17 award year up from the current maximum of $5,775. In addition, funds for TRIO programs are increased by $60 million and the GEAR UP program is increased by $21 million. Campus-based programs like Supplemental Educational Opportunity Grants (SEOG) and Federal Work Study (FWS), which were threatened with extinction earlier this year, continue to be funded at the current year’s levels.
The omnibus bill made permanent two temporary tax benefits important to higher education: the Charitable IRA Rollover and the American Opportunity Tax Credit. The former allows individuals age 70 ½ and older to donate excess retirement funds directly to charities, including colleges, up to $100,000 annually. The AOTC, which was created as part of the federal stimulus package several years ago by consolidating and expanding several existing tax breaks, reimburses taxpayers up to $2,500 for a range of college-related expenses (tuition, fees, books and other educational materials). To qualify, single filers must make less than $80,000 and married/joint filers less than $160,000.
The tax and spending bill also:
- Phases out by the end of 2016 the Above-the-Line Tuition Deduction. This benefit is not as generous as the AOTC, and is considered by NAICU to be confusing and duplicative,
- Delays from January 1, 2018 to January 1, 2020 the “Cadillac” tax on high cost employer-sponsored health plans, and
- Failed in its attempt to limit the Department of Education regulations on state authorization, credit hour definition, teacher preparation, and gainful employment.
Advocacy efforts by NAICU, other national and state higher education advocacy organizations, and individual colleges and universities were instrumental in helping to forge broad, bi-partisan budget agreements for the benefit of students and their families.