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AAU, Associations Urge Congressional Leaders to Repeal Taxability of Pell Grants

AAU joined ACE and 17 other higher education associations in sending a letter to House leadership urging them to repeal the taxability of Pell Grants in the FY22 reconciliation process. The letter draws attention to the fact that, since 1986, Pell Grant awards spent on non-tuition expenses such as room and board have been taxable. “Repealing the taxability of Pell Grant aid would permit low-income students to retain more of this critical financial aid to cover the cost of college,” the letter states.

The letter also expresses support for a provision in the Build Back Better Act that fixes a problematic interaction between the American Opportunity Tax Credit and Pell Grants, which results in some Pell students receiving little to no benefit from the AOTC. Fixing the AOTC-Pell interaction issue and repealing the taxability of Pell Grants, the letter says, “will magnify the positive impact for low-income students of these badly needed additional funds to cover college costs.”

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