House lawmakers introduced the bipartisan Tax-Free Pell Grant Act last week, with the Senate expected to introduce a bipartisan companion bill soon.
The House measure was introduced on April 4 by Reps. Lloyd Doggett (D-Texas), Mike Kelly (R-Pennsylvania), Danny Davis (D-Illinois) and Randy Feenstra (R-Iowa). All four legislators sit on the House Ways and Means Committee that will write tax legislation later this year. As explained in Friday’s CC Daily, that legislation likely will pass with only Republican votes.
The American Association of Community Colleges (AACC) has long supported Tax-Free Pell Grant legislation and rallied members behind it. The bill largely only affects community college students because the tax code is biased against low-income students attending low-cost institutions. The legislation would shield community college students from paying taxes on portions of their Pell Grant that can go toward books and living expenses (under current law, the federal government takes away with one hand what it gives with the other) and enable hundreds of thousands of them to qualify for the $2,500 American Opportunity Tax Credit. (Also under current law, families earning $160,000 and paying $40,000 or more in tuition per year can receive the $2,500 credit, while a community college Pell Grant recipient largely gets nothing.)
Despite the incredible pressures on the tax bill’s crafters to reject new provisions that would cost the Treasury revenue and to limit the measure to extending existing tax preferences, AACC members have created substantial support for the measure. The association still hopes that our champions will succeed in getting it included in the mammoth tax bill. One of the bill’s key advantages is its relatively low cost, estimated at just $1.9 billion over 10 years.
We thank the many of you who have helped with our efforts thus far and will rely on your support in the weeks to come, as the Ways and Means and Finance Committees markup their bills. Stay tuned for more action.
