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Build Back Better Act includes aid for higher education institutions

The House passed the latest, albeit scaled-down, iteration of the Build Back Better (BBB) Act on Nov. 19, 2021, which includes a total of $40 billion in higher education and workforce development investments. This historic funding package, coupled with Higher Education Emergency Relief Fund (HEERF) allocations, provides an incredible opportunity for colleges and universities to increase affordability, generate revenue through additional enrollment and support student, faculty and staff success. The BBB Act is still navigating Congress and is subject to change. Below are the provisions currently in the bill that apply to higher education institutions.

Increase of maximum Pell grant award

The proposed bill increases the current maximum Pell grant award by $550 for students who attend public or private not-for-profit institutions. The $550 boost is in addition to a $400 increase that went through the annual appropriations process, totaling an approximate 15% increase in total, up to a proposed new amount of $6,450. Other provisions in the BBB bill would repeal the taxability of Pell grants.

Expanded access to federal financial aid

If passed by the Senate and signed by President Biden, the BBB Act would expand access to federal financial aid beginning in 2022 to students receiving benefits from the Deferred Action for Childhood Arrivals (DACA) and Temporary Protected Status programs (TPS). In addition, the bill would authorize additional spending to help reduce backlogs for processing work authorizations and other immigration documents. This provision would be temporary in nature, and sunset in 2030.

Cash infusion for HBCUs, TCUs, HSIs and MSIs

The BBB agenda strives to make a quality degree more affordable through targeted investments. $10 billion is slated for Historically Black Colleges and Universities (HCBUs), Tribal Colleges and Universities (TCUs), Hispanic-Serving Institutions (HSIs) and other minority-serving institutions (MSIs) to build capacity, modernize research infrastructure and provide financial aid to low-income students.

As part of the $10 billion funding, $3 billion will be used for grants to improve research and development infrastructure. Also included in the bill is institutional aid for capacity-building and financial aid for low-income students.

MSIs are expected to receive $6 billion in direct institutional aid through the BBB Act while HCBUs are expected to receive a $2 billion allocation. The remaining funding will be distributed among the other qualifying institutions.

Workforce development

An additional $20 billion investment would support training programs and other workforce development initiatives that have been a long-time driver of community college enrollment. The framework proposes to expand the Registered Apprenticeship Program (RAP) and other paid job training programs to fill openings in high-skill, high-wage and in-demand occupations.

Challenges and opportunities ahead

The current BBB framework does not include student loan forgiveness or tuition-free community college, which were eliminated from the legislation during the recent negotiations. However, the BBB Act overall does include several wins for the higher education industry.

As we learned from the HEERF allocations in 2020 and 2021, guidance from the federal government may be delayed and will likely require judgement or interpretation before it can be fully implemented. Institutions may desire to seek new populations of students to enhance enrollment, but need to be sure that the systems, infrastructure and processes can accommodate new students with potentially more diverse motivations and needs.

Baker Tilly can help

Baker Tilly’s higher education team continues to monitor the BBB Act and is available to assist your institution in proactively planning for additional funding and evaluating opportunities to best serve your students, faculty and staff. Our specialized professionals can help your institution:

  • Develop a strategic approach to leveraging BBB funding
  • Discuss and apply accounting treatment
  • Address compliance requirements

For more information, or to learn more about how Baker Tilly can help, contact our team.

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