The amount eligible for exclusion under an FSA is $5000 per year, or the earned income (income earned from working, does not count investments etc.) of the lower earning spouse. In the case of a spouse who is a full time student, they are "imputed" an income of $250 for each month they are a student.
If your spouse's earned income from working is less than $5000, then part of your exclusion will be added back to your taxable income. The credit was created to support child care while you and your spouse work. Therefore, the eligible expenses can't be more than the lower spouse's income.
If you think the credit should be administered differently, you will need to talk to Congress.
