Post-graduation scholarship grants excluded from gross income in same manner as qualified scholarships

(a)

In general

Section 117(a) of the Internal Revenue Code of 1986 is amended— (1)by striking the period at the end and inserting , or, (2)by striking any amount received and inserting the following:

any amount which—(1)is received

, and

(3)by adding at the end the following new paragraph:

(2)is a post-graduation scholarship grant received by or paid on behalf of an individual.

(b)

Post-Graduation scholarship grant

Section 117(b) of such Code is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph:

(2)

Post-graduation scholarship grant

(A)

In general

The term post-graduation scholarship grant means any grant program— (i)which is established by an organization which— (I)is described in section 501(c)(3) and exempt from tax under section 501(a) (other than an organization established by an organization described in section 170(b)(1)(A)(ii) or an organization described in section 170(b)(1)(A)(iii) the principal purpose or function of which is the provision of medical education), and (II)is either a private foundation or a community trust described in section 170(b)(1)(A)(vi), (ii)which requires a grantee to live and work in an applicable community, and (iii)under which, in accordance with the conditions of a grant, such organization repays any portion of an applicable education loan incurred by an individual. (B)

Applicable community

For purposes of subparagraph (A)(ii), the term applicable community means any area that— (i)is— (I)a low-income community (as determined under section 45D(e)), or (II)a county that has, during the 10-year period ending with the year in which the most recent census was conducted, a net out-migration of inhabitants from the county of the population of the county at the beginning of such period, and (ii)has a bachelor’s degree attainment rate for the population of 25–34 year-olds that is below the national average for such population (as determined based on data collected by the Census Bureau). (C)

Applicable education loan

For purposes of subparagraph (A)(iii), the term applicable education loan means, with respect to any individual, a qualified education loan (as defined in section 221(d)(1)) incurred to pay qualified higher education expenses (as defined in section 221(d)(2)) of such individual.

(c)

Amount not treated as taxable expenditure by private foundation

Section 4945(g) of such Code is amended by striking or at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , or, and by adding at the end the following new paragraph:

(4)the grant is a post-graduation scholarship grant (as defined in section 117(b)(2)).

(d)

Denial of double benefit

Section 221(e) of such Code is amended by redesignating paragraphs (2) and (3) as paragraphs (3) and (4), respectively, and by inserting after paragraph (1) the following new paragraph:

(2)

Denial of double benefit in case of post-graduation scholarship grants

Any interest which is paid as part of a post-graduation scholarship grant and excluded from gross income under section 117 shall not be taken into account under this section.

(e)

Regulatory authority

Section 117 of such Code is amended by adding at the end the following new subsection:

(e)

Regulations

The Secretary shall prescribe such reporting requirements and regulations as may be necessary or appropriate to carry out subsection (a)(2), including— (1)regulations defining under what conditions an individual is considered to live and work in a community for purposes of subsection (b)(2)(A)(ii), and (2)regulations to ensure the implementation and effectiveness of such subsection.

(f)

Effective date

The amendments made by this section shall apply with respect to taxable years beginning after the date of enactment of this Act. (g)

Reports

(1)

Secretary of Treasury

Not later than 3 years after the date of the enactment of this Act, and periodically thereafter, the Secretary of the Treasury, or the Secretary's delegate, shall submit to Congress a report on the implementation and effectiveness of the amendments made by this section. (2)

Comptroller General

(A)

In general

Not later than 5 years after the date of enactment of this Act, the Comptroller General of the United States shall publish the result of a study on post-graduation scholarship grants to which section 117 of the Internal Revenue Code of 1986 (as amended by this section) applies. (B)

Contents

The information published under subparagraph (A) shall include the following: (i)A description of the characteristics of individuals who receive post-graduation scholarship grants. (ii)The length of time involved in such grants. (iii)The amount paid out under such grants. (iv)The disposition of any funds paid under such grants, including the identity of any loan holders who benefit from such funds.