REGISTER
Register now to connect with your local AmeriCorps Alums chapter, learn about our Career Development Program, access cool member benefits, and more!

Print Page   |   Contact Us   |   Sign In
Why It Makes Sense To Eliminate Ed Award Taxation

After using the Ed Award, many alumni are hit with an unexpected federal tax obligation that, on average, runs in the hundreds of dollars.  For example, an AmeriCorps alum who wants to use his or her Ed Award to pay off student loans but works at a low-paying non-profit, as many alums do, is typically obligated to pay several hundreds of dollars in out-of-pocket taxes.  Because taxes are not deducted beforehand, this burden can be overwhelming.  There are several sound reasons why it makes sense to eliminate taxation of the Ed Award, all of which are detailed below.

 
1. TAXATION OF THE ED AWARD IS NOT IN LINE WITH SIMILAR FEDERAL EDUCATIONAL AWARDS

In contrast to the Segal AmeriCorps Education Award, G.I. Bill benefits are not treated as taxable income. Moreover, today the Segal AmeriCorps Ed Award is still only $4,725, while the education benefit given to military veterans (for those who enlist for less than 3 years) is up to $13,200 for a comparable twelve months of service.  AmeriCorps members can earn two Ed Awards for two years of service, for a total of $9,450.  Likewise, Pell Grants are not treated as taxable income, and just like the GI Award, average awarded amounts of the Pell Grant have steadily increased since the '93-'94 school year.

Table 1: G.I. Award

Table 2: Pell Grant Award

Year

Amount/Month

99-'00

$528
00-'01 $546
01-'02 $650
02-'03 $732
03-'04 $800
04-'05 $1,004
05-'06 $1,034
06-'07 $1,075
07-'08 $1,101
Source: Department of
Defense
Year
Maximum
Award
Average
Award
93-'94 $2,300 $1,506
94-'95 $2,300 $1,502
95-'96 $2,340 $1,515
96-'97 $2,470 $1,577
97-'98 $2,700 $1,696
98-'99 $3,000 $1,876
99-'00 $3,125 $1,933
00-'01 $3,300 $2,070
01-'02 $3,750 $2,376
02-'03 $4,000 $2,338
03-'04 $4,050 $2,467
04-'05 $4,050 $2,441
05-'06 $4,050 $2,486
06-'07 $4,050 $2,494
07-'08 $4,310
Source: FinAid.org
 

Table 3: Segal AmeriCorps Ed Award

Year

Ed Award

Ed Award: Part-Time

Ed Award: Minimum-Time

93-'94

$4,725

$2,362

$1,000

94-'95

$4,607

$2,303

$975

95-'96

$4,480

$2,240

$948

96-'97

$4,352

$2,175

$921

97-'98

$4,254

$2,127

$900

98-'99

$4,189

$2,094

$887

99-'00

$4,098

$2,049

$867

00-'01

$3,965

$1,982

$839

01-'02

$3,855

$1,927

$816

02-'03

$3,795

$1,897

$803

03-'04

$3,715

$1,857

$786

04-'05

$3,614

$1,806

$764

05-'06

$3,496

$1,747

$739

06-'07

$3,386

$1,693

$716

07-'08

$3,292

$1,646

$696

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2. RISING COST OF EDUCATION

Table 4: Cost to Attend College ’93 – ‘08

Year

Private 4-yr

Public 4-yr

Public 2-yr

93-'94

$10,448

$2,334

$1,116

97-'98

$13,785

$3,111

$1,567

98-'99

$14,709

$3,247

$1,554

99-'00

$15,518

$3,362

$1,649

00-'01

$16,072

$3,508

$1,642

01-'02

$17,337

$3,766

$1,608

02-'03

$18,060

$4,098

$1,674

03-'04

$18,950

$4,645

$1,909

04-'05

$20,045

$5,126

$2,078

05-'06

$20,980

$5,492

$2,182

06-'07

$22,308

$5,804

$2,266

07-'08

$23,712

$6,185

$2,361

 

Source: The College Board, Trends in College Pricing 2007

 

Since 1993, the cost to attend institutions of higher learning has more than doubled (note  Table 5 to the left). During this same time, the Ed Award has never received an increase.  Eliminating taxation on the Education Award would help to supplement Congressional efforts to make college more affordable for AmeriCorps alumni across the country, while at the same time signal Congressional support for national and community service. 

 

 

 

 
 
 
 
 
3. DECLINING PURCHASING POWER OF THE EDUCATION AWARD DUE TO INFLATION

The National Service and Community Trust Act of 1993 set the education award benefit for AmeriCorps service at $4,725.  This was a compromise value that reflected an amount equal to approximately 90% of the scholarship given to military veterans. The award amount has not changed during AmeriCorps’ 15 year existence, despite inflation and increases in college tuition costs.  Please refer to Table 3 above to note the steady decrease in the value of Ed Award.  The table displays the value in constant 1993 dollars.

 

4. TAXATION IS COUNTER TO ITS INTENT

As part of the National Service and Community Trust Act of 1993, the Ed Award was enacted into law as a way to invest in the education of those U.S. residents who served their country in a domestic capacity.  Because its taxation has the effect of reducing the amount education that can be accessed through its usage, taxation of the Ed Award seems counter to its intent.  Eliminating its taxation would send a signal that reaffirms Congressional support for those individuals who serve their country in a domestic capacity while at the same time promoting the value of national and community service to our country.

 

5. ELIMINATING TAXATION MAY INCREASE UTILIZATION OF THE ED AWARD

While there is no scientific study to verify the validity of this claim, it is also possible that more alumni would utilize their Ed Award if they knew they would not be taxed during tax season.  This would not only pump more funding into institutions of higher learning, it would allow for the education of more AmeriCorps alums, better equipping them for success in the workforce.

Community Search
User Login


Forgot your password?

Become a Member

Calendar

9/29/2016
AmeriCorps Alums Virtual Grad School Fair

10/20/2016
AmeriCorps to the Corner Office

10/27/2016
AmeriCorps Alums Virtual Career Fair

12/9/2016
AmeriCorps Alums Virtual Graduate School Fair

Jobs for Alums

Our Partners