[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1974 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                S. 1974

  To amend the Internal Revenue Code of 1986 to make higher education 
more affordable by providing a full tax deduction for higher education 
         expenses and a tax credit for student education loans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           November 19, 1999

Mr. Schumer (for himself, Ms. Snowe, Mr. Bayh, and Mr. Smith of Oregon) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to make higher education 
more affordable by providing a full tax deduction for higher education 
         expenses and a tax credit for student education loans.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Make College Affordable Act of 
1999''.

SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

    (a) Deduction Allowed.--Part VII of subchapter B of chapter 1 of 
the Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 222 as 
section 223 and by inserting after section 221 the following:

``SEC. 222. HIGHER EDUCATION EXPENSES.

    ``(a) Allowance of Deduction.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a deduction an amount equal to the 
        applicable dollar amount of the qualified higher education 
        expenses paid by the taxpayer during the taxable year.
            ``(2) Applicable dollar amount.--The applicable dollar 
        amount for any taxable year shall be determined as follows:

                                                             Applicable
``Taxable year:                                          dollar amount:
    2001..........................................              $4,000 
    2002..........................................              $8,000 
    2003 and thereafter...........................             $12,000.
    ``(b) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount which would (but for this 
        subsection) be taken into account under subsection (a) shall be 
        reduced (but not below zero) by the amount determined under 
        paragraph (2).
            ``(2) Amount of reduction.--The amount determined under 
        this paragraph equals the amount which bears the same ratio to 
        the amount which would be so taken into account as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) $62,450 ($104,050 in the case of a 
                        joint return, $89,150 in the case of a return 
                        filed by a head of household, and $52,025 in 
                        the case of a return by a married individual 
                        filing separately), bears to
                    ``(B) $15,000.
            ``(3) Modified adjusted gross income.--For purposes of this 
        subsection, the term `modified adjusted gross income' means the 
        adjusted gross income of the taxpayer for the taxable year 
        determined--
                    ``(A) without regard to this section and sections 
                911, 931, and 933, and
                    ``(B) after the application of sections 86, 135, 
                219, 220, and 469.
        For purposes of the sections referred to in subparagraph (B), 
        adjusted gross income shall be determined without regard to the 
        deduction allowed under this section.
    ``(c) Qualified Higher Education Expenses.--For purposes of this 
section--
            ``(1) Qualified higher education expenses.--
                    ``(A) In general.--The term `qualified higher 
                education expenses' means tuition and fees charged by 
                an educational institution and required for the 
                enrollment or attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse,
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151, or
                            ``(iv) any grandchild of the taxpayer,
                as an eligible student at an institution of higher 
                education.
                    ``(B) Eligible courses.--Amounts paid for qualified 
                higher education expenses of any individual shall be 
                taken into account under subsection (a) only to the 
                extent such expenses--
                            ``(i) are attributable to courses of 
                        instruction for which credit is allowed toward 
                        a baccalaureate degree by an institution of 
                        higher education or toward a certificate of 
                        required course work at a vocational school, 
                        and
                            ``(ii) are not attributable to any graduate 
                        program of such individual.
                    ``(C) Exception for nonacademic fees.--Such term 
                does not include any student activity fees, athletic 
                fees, insurance expenses, or other expenses unrelated 
                to a student's academic course of instruction.
                    ``(D) Eligible student.--For purposes of 
                subparagraph (A), the term `eligible student' means a 
                student who--
                            ``(i) meets the requirements of section 
                        484(a)(1) of the Higher Education Act of 1965 
                        (20 U.S.C. 1091(a)(1)), as in effect on the 
                        date of the enactment of this section, and
                            ``(ii) is carrying at least one-half the 
                        normal full-time work load for the course of 
                        study the student is pursuing, as determined by 
                        the institution of higher education.
                    ``(E) Identification requirement.--No deduction 
                shall be allowed under subsection (a) to a taxpayer 
                with respect to an eligible student unless the taxpayer 
                includes the name, age, and taxpayer identification 
                number of such eligible student on the return of tax 
                for the taxable year.
            ``(2) Institution of higher education.--The term 
        `institution of higher education' means an institution which--
                    ``(A) is described in section 481 of the Higher 
                Education Act of 1965 (20 U.S.C. 1088), as in effect on 
                the date of the enactment of this section, and
                    ``(B) is eligible to participate in programs under 
                title IV of such Act.
    ``(d) Special Rules.--
            ``(1) No double benefit.--
                    ``(A) In general.--No deduction shall be allowed 
                under subsection (a) for any expense for which a 
                deduction is allowable to the taxpayer under any other 
                provision of this chapter unless the taxpayer 
                irrevocably waives his right to the deduction of such 
                expense under such other provision.
                    ``(B) Denial of deduction if credit elected.--No 
                deduction shall be allowed under subsection (a) for a 
                taxable year with respect to the qualified higher 
                education expenses of an individual if the taxpayer 
                elects to have section 25A apply with respect to such 
                individual for such year.
                    ``(C) Dependents.--No deduction shall be allowed 
                under subsection (a) to any individual with respect to 
                whom a deduction under section 151 is allowable to 
                another taxpayer for a taxable year beginning in the 
                calendar year in which such individual's taxable year 
                begins.
                    ``(D) Coordination with exclusions.--A deduction 
                shall be allowed under subsection (a) for qualified 
                higher education expenses only to the extent the amount 
                of such expenses exceeds the amount excludable under 
                section 135 or 530(d)(2) for the taxable year.
            ``(2) Limitation on taxable year of deduction.--
                    ``(A) In general.--A deduction shall be allowed 
                under subsection (a) for qualified higher education 
                expenses for any taxable year only to the extent such 
                expenses are in connection with enrollment at an 
                institution of higher education during the taxable 
                year.
                    ``(B) Certain prepayments allowed.--Subparagraph 
                (A) shall not apply to qualified higher education 
                expenses paid during a taxable year if such expenses 
                are in connection with an academic term beginning 
                during such taxable year or during the first 3 months 
                of the next taxable year.
            ``(3) Adjustment for certain scholarships and veterans 
        benefits.--The amount of qualified higher education expenses 
        otherwise taken into account under subsection (a) with respect 
        to the education of an individual shall be reduced (before the 
        application of subsection (b)) by the sum of the amounts 
        received with respect to such individual for the taxable year 
        as--
                    ``(A) a qualified scholarship which under section 
                117 is not includable in gross income,
                    ``(B) an educational assistance allowance under 
                chapter 30, 31, 32, 34, or 35 of title 38, United 
                States Code, or
                    ``(C) a payment (other than a gift, bequest, 
                devise, or inheritance within the meaning of section 
                102(a)) for educational expenses, or attributable to 
                enrollment at an eligible educational institution, 
                which is exempt from income taxation by any law of the 
                United States.
            ``(4) No deduction for married individuals filing separate 
        returns.--If the taxpayer is a married individual (within the 
        meaning of section 7703), this section shall apply only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(5) Nonresident aliens.--If the taxpayer is a nonresident 
        alien individual for any portion of the taxable year, this 
        section shall apply only if such individual is treated as a 
        resident alien of the United States for purposes of this 
        chapter by reason of an election under subsection (g) or (h) of 
        section 6013.
            ``(6) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary or appropriate to carry out 
        this section, including regulations requiring recordkeeping and 
        information reporting.''
    (b) Deduction Allowed in Computing Adjusted Gross Income.--Section 
62(a) of such Code is amended by inserting after paragraph (17) the 
following:
            ``(18) Higher education expenses.--The deduction allowed by 
        section 222.''
    (c) Conforming Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 222 and inserting the following:

                              ``Sec. 222. Higher education expenses.
                              ``Sec. 223. Cross reference.''
    (d) Effective Date.--The amendments made by this section shall 
apply to payments made in taxable years beginning after December 31, 
1999.

SEC. 3. CREDIT FOR INTEREST ON HIGHER EDUCATION LOANS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 25A the 
following new section:

``SEC. 25B. INTEREST ON HIGHER EDUCATION LOANS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the interest paid by the 
taxpayer during the taxable year on any qualified education loan.
    ``(b) Maximum Credit.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        credit allowed by subsection (a) for the taxable year shall not 
        exceed $1,500.
            ``(2) Limitation based on modified adjusted gross income.--
                    ``(A) In general.--If the modified adjusted gross 
                income of the taxpayer for the taxable year exceeds 
                $50,000 ($80,000 in the case of a joint return), the 
                amount which would (but for this paragraph) be 
                allowable as a credit under this section shall be 
                reduced (but not below zero) by the amount which bears 
                the same ratio to the amount which would be so 
                allowable as such excess bears to $20,000.
                    ``(B) Modified adjusted gross income.--The term 
                `modified adjusted gross income' means adjusted gross 
                income determined without regard to sections 911, 931, 
                and 933.
                    ``(C) Inflation adjustment.--In the case of any 
                taxable year beginning after 2002, the $50,000 and 
                $80,000 amounts referred to in subparagraph (A) shall 
                be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section (1)(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `2001' for `1992'.
                    ``(D) Rounding.--If any amount as adjusted under 
                subparagraph (C) is not a multiple of $50, such amount 
                shall be rounded to the nearest multiple of $50.
    ``(c) Dependents Not Eligible for Credit.--No credit shall be 
allowed by this section to an individual for the taxable year if a 
deduction under section 151 with respect to such individual is allowed 
to another taxpayer for the taxable year beginning in the calendar year 
in which such individual's taxable year begins.
    ``(d) Limit on Period Credit Allowed.--A credit shall be allowed 
under this section only with respect to interest paid on any qualified 
education loan during the first 60 months (whether or not consecutive) 
in which interest payments are required. For purposes of this 
paragraph, any loan and all refinancings of such loan shall be treated 
as 1 loan.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Qualified education loan.--The term `qualified 
        education loan' has the meaning given such term by section 
        221(e)(1).
            ``(2) Dependent.--The term `dependent' has the meaning 
        given such term by section 152.
    ``(f) Special Rules.--
            ``(1) Denial of double benefit.--No credit shall be allowed 
        under this section for any amount taken into account for any 
        deduction under any other provision of this chapter.
            ``(2) Married couples must file joint return.--If the 
        taxpayer is married at the close of the taxable year, the 
        credit shall be allowed under subsection (a) only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(3) Marital status.--Marital status shall be determined 
        in accordance with section 7703.''
    (b) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25A the following new item:

                              ``Sec. 25B. Interest on higher education 
                                        loans.''
    (c) Effective Date.--The amendments made by this section shall 
apply to any qualified education loan (as defined in section 25B(e)(1) 
of the Internal Revenue Code of 1986, as added by this section) 
incurred on, before, or after the date of the enactment of this Act, 
but only with respect to any loan interest payment due after December 
31, 2000.
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