Kildee-Championed Legislation to Make College More Affordable Included in Build Back Better Budget

Press Release

Date: Sept. 23, 2021
Location: Washington, DC

WASHINGTON--Congressman Dan Kildee (MI-05), Chief Deputy Whip of the House Democratic Caucus and Member of the House Ways and Means Committee, today applauded the inclusion of legislation he's championed to eliminate income taxes paid on Pell Grants in President Biden's Build Back Better budget.

Federal Pell Grants are awarded to undergraduate students who display exceptional financial need and have not yet earned a degree. Currently, if Pell Grants are used for tuition and related educational expenses, such as books, supplies and equipment required for classes, they are not considered taxable income. However, Pell Grants used to pay for a student's room and board are considered taxable income, significantly decreasing the value of students' financial aid. This fails to provide benefits for the entire cost of college. The Kildee-championed legislation would exclude Pell Grants used for any allowable purpose from income taxes.

Last week, the Ways and Means Committee voted to advance President Joe Biden's Build Back Better budget that helps level the playing field for Michigan's working families. This budget included provision, like Kildee's Scholarship Tax Relief for Students Act, to fully exempt the Pell Grant from income tax.

"In today's economy, some postsecondary education--whether an apprenticeship program, associate degree, or a four-year college program--is necessary to secure a good paying job to support a family. Unfortunately, too many hardworking students and families in Michigan are held back by the increasing costs of higher education and the burden of student loan debt," said Congressman Kildee. "If a student is receiving financial aid, it makes no sense for them to pay taxes on it. Exempting Pell Grants from income tax is a commonsense policy that will make college more affordable and ensure that our future generations can unleash their full potential in the new economy."

Congressman Kildee first introduced legislation to exempt the Pell Grant from income tax in the 114th Congress after a call from Pauline Helmling, who contacted the Congressman's office with ideas to address student loan debt. Her ideas are reflected in the legislation, the Scholarship Tax Relief for Students Act, that was reintroduced today.

"What a shame it would be for academically gifted students to have to turn down scholarship support because they can't pay the taxes on it. We should view academic achievers as our greatest hope for a prosperous future society, not a source of tax revenue. I'm thrilled that this bill is moving forward. It's been a long time in the making, and I applaud the efforts of Congressman Kildee in keeping it alive. I look forward to seeing it signed into law," said Pauline Helmling, a constituent from Bay City.

"Congressman Kildee's Scholarship Tax Relief Act is for the people and would deliver real tangible relief for many hard-working students and families. This legislation was designed with students in mind. There are many students at the University of Michigan-Flint who receive Pell Grants to help them afford their education, and this bill would extend major relief to many of my peers as we pursue our dreams of a college education," said Levi N. Todd, Student Body President at the University of Michigan-Flint.

Since coming to Congress, Congressman Kildee has been working tirelessly for students to make sure that postsecondary education is accessible and affordable. This Congress, he introduced legislation to help foster and homeless youth attend and complete higher education. Additionally, Kildee supported, and the U.S. House of Representatives recently passed, a seven-bill funding package for Fiscal Year 2022, which included over $24.7 billion in federal funding for Pell Grants and increased the maximum award amount by $400.