U.S. Senator Rick Santorum--Education


Graphic: Federal Eagle BUILDING FOR THE FUTURE: EXPANDING OPPORTUNITIES FOR HIGHER EDUCATION

PELL GRANTS

  • Throughout my tenure in Congress, I have been a strong supporter of federal financial aid programs for students in higher education. Since 1991, when I came into office, appropriations for Pell Grants have increased from $5.37 billion to $7.42 billion in 1999. The Higher Education Act (HEA), which was reauthorized in 1992 and 1998, increased authorizations for the grants in both instances. The HEA Amendments of 1998, which I supported, were signed into law by the President on October 7, 1998. This law, which I supported, authorizes an increase in the maximum Pell Grant award for the next five consecutive years. Awards, which had been capped at $3,000 per year, are authorized to be increased to $4,500 for academic year 1999-2000, to $4,800 for 2000-2001, $5,100 for 2001-2002, $5,400 for 2002-2003, and $5,800 for 2003-2004. As you may be aware, these increases in authorizations do not guaranty corresponding increases in appropriations. However, since 1993, the appropriated maximum for the grants have either risen or maintained every year, rising from $2,300 in 1993 to $3,000 in 1999.

  • In April, I joined seventeen of my colleagues in sending a letter to Chairman Arlen Specter and Ranking Member Tom Harkin expressing my support for increasing the maximum Pell Grant for FY01 by $400, from $3,300 to $3,700, as the Labor, Health and Human Services, and Education Subcommittee of the Senate Appropriations Committee considered Pell Grant appropriations for the Fiscal Year 2001. During the Senate's consideration of the FY01 budget resolution, Senator Edward Kennedy of Massachusetts offered an amendment to further increase funding for Pell Grants, offset by reducing the resolution's tax relief provisions, including education tax relief. I voted against this measure as it would have decreased the modest tax relief already in the budget resolution by an additional $2.7 billion over the next five years. The budget resolution, which I supported, assumed a additional increase in Pell Grants consistent with the President's request.

  • I believe that there needs to be an active federal role in higher education because institutions of higher learning constitute a nationwide educational infrastructure. Colleges and universities educate students from across the country. Further, universities are primarily sustained by tuition and alumni contributions received from across the nation. Clearly, higher education is a national concern to be addressed, in part, on a nationwide basis. I do not believe that the government should be involved in curriculum development, but where funding issues are concerned, the federal government has a role.

    EDUCATIONAL TAX INCENTIVES IN THE TAXPAYER RELIEF ACT OF 1997

  • I supported legislation which provided additional tax incentives for education which assist students and parents in offsetting some of the costs of higher education signed into law in 1997. These additional incentives include the HOPE Scholarship, the Lifetime Learning Credit, Education Savings Accounts, state sponsored tuition plans, certain Individual Retirement Account (IRA) and Roth IRA penalty-free withdrawals, and student loan interest deductions.

  • For instance, HOPE Scholarships are available to students in their first two years in college. During that time, taxpayers are eligible for a tax credit of up to $1,500 for tuition and fees on a per student basis. Specifically, 100% of the first $1000 of expenses and 50% of the second $1000 can be claimed. Eligibility is phased out for single file taxpayers between $40,000 and $50,000 of income and for joint filers between $80,000 and $100,000 of income.

  • Moreover, the Lifetime Learning Credit is available to junior and senior undergraduate students, all graduate students, and anyone taking classes part-time to improve or upgrade their job skills. This credit can be claimed for tuition and fees up to $1,000 on a per family basis. Specifically, 20% of the first $5000 of expenses can be claimed. The amount of eligible expenses increases to $10,000 in 2003, resulting in a $2000 maximum tax credit.

    EDUCATION SAVINGS ACCOUNTS

  • The Senate passed legislation, with my support, that gives parents, teachers and schools the tools they need to address the educational needs of America’s children by expanding current Education Savings Accounts. Teachers and parents know that no two children are alike and that they all have different educational needs, and that is why I supported this legislation which puts resources in the hands of nearly 11 million parents to address their children's individual education requirements. We cannot possibly expect schools alone to address all of these needs.

  • Under current law, people can establish tax-free, interest bearing savings accounts for each of their children to which they can contribute up to $500 a year. The tax benefits are only available if the money is used for college-related costs. The Affordable Education Act increases the annual contribution limit from $500 to $2000 and expands the use of these education accounts, or A+ Accounts as they are commonly called, to elementary and secondary education expenses. These accounts could be used to pay for tutoring, home computers, uniforms, transportation, school supplies, SAT preparatory courses, tuition, and after-school programs for kindergarten through 12th grade.

  • It is a challenge for parents to prepare their children for college and careers in our demanding new economy. The Affordable Education Act can make it easier for parents by allowing them to build the resources they need to help their children succeed. A family saving just $10 per week in an A+ Account will have $12,152 in total savings and $1,364 in tax savings by the time their child enters high school. According to the Joint Committee on Taxation, more than 70 percent of the tax savings from these accounts will go to middle-income families making $75,000 or less.

  • If parents could save the full $2000 each year in an A+ Account – $5.48 a day or $38.46 a week, they could conservatively have $65,200 when their child turns 18 and heads for college. This figure assumes a 6 percent rate of interest, the rate on a government security. More aggressive investing could yield even greater returns.

  • The legislation will also allow corporations, foundations and other organizations to use A+ Accounts to set up scholarship funds for low-income children. This provision significantly expands the number of people who could help defray the increasing costs of educating children during the grade school and high school years - years that are critical to a child's future success both in college and in the workplace. This means that not only parents, but grandparents, other family members, friends, scholarship organizations, companies, unions and charities could establish such an account for a kindergarten through 12th grade student.

  • A+ Accounts put more money into the hands of parents so that they can decide how best to augment their children's education. The Affordable Education Act addresses the needs of elementary, high school and college students by providing parents with more choices, greater resources, and expanded opportunities.

    OTHER TAX DEDUCTIONS FOR HIGHER EDUCATION

  • The Affordable Education Act also made permanent the education deduction for costs to employers who assist their employees with undergraduate expenses, previously extended by the Taxpayer Relief Act of 1997, and it restored the deduction to employers for graduate expenses as well. It also expanded the interest deductible for education loans for college students.

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