On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA). The Act commits $100 billion to education, with $8.5 billion allocated to California. Education programs to receive funding through ARRA include Local Education Agency Title I Grants, Educational Technology Grants, IDEA Grants, Federal Pell Grants, and Work-Study Programs. The largest portion of stimulus funds allocated to education is the Fiscal Stabilization Fund, of which California is using $4.8 billion for education. An important condition attached to stabilization funding is Maintenance of Effort. ARRA requires states to maintain funding for colleges and universities at levels equivalent to that in 2006. Consequently, the exact amount of stabilization funding that California will receive cannot be determined until the 2009-10 state budget is signed and state funding for higher education is finalized. This paper presents the reactions from the higher education systems in the face of drastic budget reductions. The counterproposals of organizations such as Sallie Mae, the National Association of Student Loan Administrators (NASLA), and the National Association of Student Financial Aid Administrators (NASFAA) are briefly discussed.