When Yen Huynh first signed up to serve in AmeriCorps in Nebraska, her goal was to become a resident so she could pay in-state tuition for graduate school.Check out the complete 2021 Washington Monthly rankings here.
“My original plan was to move to Nebraska, gain state residency, go to school, and work for a little bit but [then] eventually move back home to Albuquerque,” says Huyhn, a 2016 graduate of the University of New Mexico, where she got a bachelor’s degree in political science and criminology.
The plan worked. Huyhn became a resident, and she is now getting her master’s degree in political science from the University of Nebraska Omaha, where she is paying the in-state rate. But were Huynh still in New Mexico and planning to join AmeriCorps today, she would qualify for resident tuition a different way. That’s because as of April 2021, Nebraska is granting in-state tuition to anyone who has served in AmeriCorps, even if that service took place in another state. It’s a change that could save program alumni tens of thousands of dollars.
“When I found out that the bill for in-state tuition was passed for those who had finished serving in AmeriCorps, I thought it to be a great benefit,” Huynh says. She supports the change, even though she is already a resident.
The person behind the new law in Nebraska is Democratic State Senator Tony Vargas, himself an AmeriCorps alum. Vargas met his wife a decade ago while both were working as educators for Teach for America, the education nonprofit that recruits “promising leaders” to teach for at least two years in a low-income community. (Teach for America operates under the umbrella of AmeriCorps.) Vargas taught in Brooklyn, and his wife taught in the Bronx. The couple eventually moved to Nebraska so Vargas’s wife could attend law school. But education remained a passion. Vargas served on the Omaha school board from 2013 until 2016, when he successfully ran to become a state senator.
Vargas attributes his interest in service and education to his parents, who immigrated from Peru to New York City, where Vargas was born. He recalls growing up as a “free and [reduced-price] lunch kid” in elementary through high school. He was a Pell Grant recipient, and only the second person in his family to go to college.
“My parents sacrificed a lot for us and always taught us that education was really important, but also that it was important to give back to communities like ours,” Vargas told me.
Service leaders and higher education leaders in Nebraska are excited about the change, which they say is both right on the merits and good for the state’s economy. “AmeriCorps members do so many great things for our country, and in thanks for their service, we hope to help make higher education more affordable in any way we can,” says Cathleen Plager, executive director of ServeNebraska, a commission on volunteer service in charge of coordinating federal grants for AmeriCorps projects in the state. Plager told me that since 1994, when AmeriCorps began operating, Nebraska has had 11,765 members serve in the state, and all of them have received a Segal AmeriCorps Education Award—a Pell Grant–sized cash gift they can use for classes, student loans, and other additional expenses. (For 2021 to 2022, a Segal award is worth $6,495.) Citing information from the AmeriCorps federal agency, she said $37 million of all Segal awards have been paid to Nebraska colleges or loan institutions. Vargas and others hope the law will encourage even more AmeriCorps members to study in the state, bringing in fresh talent and dollars.
Ted Carter, president of the University of Nebraska system, is also excited about the new law. “The University of Nebraska system was proud to support state legislation recognizing the service of AmeriCorps alumni and expanding access for them to attend our university’s campuses,” Carter says. “With this legislation, we have new opportunities to attract talented, service-oriented students to Nebraska—a game changer for our workforce and the economic competitiveness of our state.”
It isn’t the only legislation Vargas has introduced to help AmeriCorps recipients. In August 2020, the governor signed into law a bill crafted by the state senator that excludes Segal awards from state income taxes. In doing so, Nebraska joins Iowa, which already exempts the awards. Many federal lawmakers want the national government to do the same. To that end, in June 2021, a bipartisan group of congressional representatives introduced the Segal AmeriCorps Education Award Tax Relief Act.
Shirley Sagawa, who drafted the legislation that created AmeriCorps during the Clinton administration, supports the change. She says making the Segal awards tax-exempt is a commonsense policy goal that would alleviate an unnecessary hardship for AmeriCorps volunteers. “Imagine that you have spent the year scraping by on [a] poverty-level stipend in order to serve your community and earn money for college,” Sagawa told me. “You use your education award for tuition. Then you get hit with a tax bill of hundreds or even a thousand dollars.” She argued that the resulting financial burden “undermines the ability of individuals to participate in AmeriCorps if they don’t have family money.”
It’s not just the tax bill that has advocates upset. As Sagawa explained, AmeriCorps volunteers cannot have their taxes deducted from the award itself. “You have to come up with cash,” she said. “How is that fair?”
There’s plenty of precedent for making federal education gifts tax-exempt. The GI Bill, for example, didn’t require recipients to pay any taxes on what they received. But Congress has a long track record of trying and failing to do the same for Segal grants. Sagawa told me that when first drafting the legislation to create the program, the goal was to make the award tax-free. But doing so would have complicated the legislation’s passage by sending it to a knotty array of congressional committees. “It was not included for jurisdictional reasons,” she said.
Representatives didn’t give up. “To my knowledge, the first time federal legislation was introduced to exclude the AmeriCorps Education Award from federal income tax was in 2001,” says Jennifer Ney, the vice president for public policy at City Year and the managing director of Voices for National Service, a coalition that advocates for national service organizations. The Call to Service Act, which would have exempted Segal awards, was repeatedly introduced from 2008 to 2019 by a wide collection of representatives. Over the years, Representative John Lewis and Senators Orrin Hatch, Ted Kennedy, and Chris Dodd have all taken up the cause. Ney says she is at a loss as to why the legislation has continuously failed.
Segal recipients, meanwhile, remain frustrated. “When you’re coming out of AmeriCorps, you typically don’t get a lot of money or income,” explains Rebecca Charles, a former AmeriCorps volunteer at a K–8 school who clocked more than 50 hours a week helping students. “At the end of the year, when you’re filing your taxes, you kind of forget that this is considered income and so you don’t necessarily plan for it when it comes to paying taxes.”
Congressional legislation would have broad ramifications. Experts say that making Segal awards federally exempt would also likely make them exempt at the state level, changing the playing field. It’s part of why advocates are so keen on getting Congress to act.
But until it does, and until other states make their universities more financially accessible to AmeriCorps alums, Nebraskan policy makers appear happy to welcome more service-minded residents.
“I brought these bills because I want to make it easier for people to serve in AmeriCorps,” Vargas said. “But I also want to make it easier to get these amazing leaders that have served to then come into the state of Nebraska and see this as a potential home.”
An earlier version of this story mistakenly stated that Nebraska offers in-state tuition only to those who serve a full year in AmeriCorps. It offers in-state tuition to anyone who has served any term in AmeriCorps. The Washington Monthly regrets the error.