Stimulus could land Indiana $11 billion boost

President Barack Obama will travel to Denver today, expected to sign legislation sending $787 billion pouring into the economy over the next four years.

Indiana experts remain divided on how the plan will affect higher education.
The state is set to receive an $11 billion boost, according to the Center for American Progress, which analyzed the bill.

Under the plan, education in Indiana would receive about $1 billion from the State Fiscal Stabilization Fund, said Senior Associate Commissioner for the Indiana
Commission for Higher Education Jeff Spalding. He added that while he cannot be certain, money could be heading in IU’s direction over the next four years.

“It’s trying to help people at both ends of the income spectrum,” Spalding said.
That money could come in the form of research grants, scholarship funds and stabilization money that could hold down increases in tuition rates.

The state must put 76 percent of the money it gets from the stabilization fund toward education, which totals around $825 million by most estimates, Spalding said.

However, that money could go toward helping K-12 schools as well as higher education, so IU could see little or no aid, although that is unlikely, he said.

“There will be a decision made at the state level once the federal money comes in, how much of it goes to K-12 and how much of it goes to higher ed,” Spalding said. “You can’t say with any certainty how much money will go to higher ed.”

The stimulus package also provides about $500 in additional funding to the Pell Grant, a program that provides aid to lower-income families, raising the amount of aid per student from $4,850 to $5,350 in fall 2009, Spalding said.

There will also be a higher cap on tax benefits for citizens filing tax returns, allowing families filing with less than $160,000 in total income to receive benefits, whereas before the maximum was $110,000, he said.

These measures, along with others, follow Obama’s plan to create a stronger economy through educating America’s youth and giving American infrastructure a boost, creating jobs and providing services and safety nets to citizens nationwide.

“There are some benefits that will happen for higher education in that it allows for some building that we believe will go towards higher education,” said Ken Carow, asssociate professor of finance at IU-Purdue University Indianapolis. “But it’s uncertain yet.”

However, some of the experts remain critical of the plan, saying it was scrambled by Congress.

“I think the whole thing just became completely politicized,” said Eric Leeper, associate professor of economics at IU. “It was never made very clear how this was supposed to get us out of the recession we’re in.”

Elham Mafi-Kreft, a clinical assistant professor of business economics at IU, agreed, citing the length of the document and lack of public knowledge about the policy as reasons for the confusion about what exactly the bill means to U.S. citizens.

“It wasn’t really available to be reviewed online as far in advance as promised,”
Mafi-Kreft said of the 1,073-page bill. “I’m sure they could have done a better job. It was not handled well at all. I think it was one of the worst processes we’ve ever had.”

Leeper also said he thinks the bill is not addressing the right factors of the economy.
“I would say that the bill is actually putting the cart before the horse, to some extent,”
Leeper said. “Fiscal policy requires well-functioning financial markets, and we don’t have those.”

Mafi-Kreft said she believes increasing government spending is not the answer.

“All that we’re doing is increasing government spending,” she said. “If we do a tax cut, we should also be cutting government spending, and it doesn’t look like we’re doing that at all.”

Despite these feelings about the plan in general, Leeper and Mafi-Kreft both agreed that the bill will probably help families fund higher education. With $16.5 billion nationwide going toward student financial assistance along with another $2.1 billion for education-related issues, the plan is bound to help higher education to some degree, Leeper said.

“That is going to help students,” Mafi-Kreft agreed. “For the student, the effect seems to be there.”

Leeper credited the Obama administration with taking a step in the right direction.

“This is a time when government needs to step up and do something,” he said. “They do recognize that there’s a crisis. The longer this is dragged out and delayed, the longer this is going to go on.”

While higher education could benefit from this bill, the effects of the legislation might take a while to set in, Leeper said. This could mean the worst is yet to come.

“It doesn’t take much to see how bad things are out there,” Leeper said. “It’s pretty hard out. No matter what happens, this summer it’s going to be pretty grim.”