Expansion of Hope and Lifetime Learning credits

(a)

Increase in per student limitation for Hope Scholarship Credit

(1)

In general

Subparagraph (B) of section 25A(b)(1) of the Internal Revenue Code of 1986 is amended by striking the applicable limit and inserting $4,000. (2)

Inflation adjustment

Paragraph (1) of section 25A(h) of such Code is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:

(B)

$4,000 amount

In the case of a taxable year beginning after 2005, the $4,000 amount contained in subsection (b)(1)(B) 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, determined by substituting calendar year 2004 for calendar year 1992 in subparagraph (B) thereof.

(3)

Conforming amendment

Subsection (b) of section 25A of such Code is amended by striking paragraph (4). (b)

Increase in gross income limitation

(1)

In general

Clause (ii) of section 25A(d)(2)(A) of such Code is amended by striking $40,000 ($80,000 and inserting $58,000 (twice such amount. (2)

Inflation adjustment

Subparagraph (A) of section 25A(h)(2) of such Code is amended to read as follows:

(A)

In general

In the case of a taxable year beginning after 2005, the $58,000 amount in subsection (d)(2) 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, determined by substituting calendar year 2004 for calendar year 1992 in subparagraph (B) thereof.

(c)

Hope Scholarship credit available for 4 years

Paragraph (2) of section 25A(b) of such Code is amended by striking 2 each place it appears in subparagraphs (A) and (C) and inserting 4. (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2004.

Loan forgiveness for public service employees

Section 428K (20 U.S.C. 1078–11) is amended to read as follows:

428K.

Loan forgiveness for public service employees

(a)

Purposes

The purposes of this section are— (1)to reduce the burden of student debt, particularly for Americans who dedicate their careers to meeting certain urgent national needs; and (2)to attract more excellent individuals into important public service careers. (b)

Loan forgiveness

(1)

In general

The Secretary shall assume the obligation to repay, pursuant to subsection (c), a loan made under section 428 or 428H, a Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan, a Federal Direct Consolidation Loan, or a Federal Perkins Loan for any new borrower after the date of enactment of the Higher Education Amendments of 1998, who— (A)is employed full time in a qualified public service position described in paragraph (2); and (B)is not in default on a loan for which the borrower seeks forgiveness. (2)

Qualified public service positions

For purposes of this section, an individual shall be treated as employed in a qualified public service position if the individual is any of the following: (A)

Highly qualified teachers of mathematics, science, and bilingual and special education and in low-income communities

An individual who— (i)is highly qualified as such term is defined in section 9101 of the Elementary and Secondary Education Act of 1965; and (ii) (I)has obtained employment as a teacher for service in a public or nonprofit private elementary or secondary school which is in the school district of a local educational agency which is eligible in such year for assistance pursuant to title I of the Elementary and Secondary Education Act of 1965, and which for the purpose of this paragraph and for that year has been determined by the Secretary (pursuant to regulations and after consultation with the State educational agency of the State in which the school is located) to be a school in which the enrollment of children counted under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 exceeds 40 percent of the total enrollment of that school; or (II)has obtained employment as a full-time teacher of mathematics, science, or bilingual or special education. (B)

First responders in low-income communities

An individual who, as determined by the Secretary of Education by regulation— (i)has obtained employment as a firefighter, police officer, or emergency medical technician; and (ii)serves a low-income community. (C)

Nurses in low income communities

An individual who is an eligible nurse and has obtained employment— (i) (I)in a clinical setting; or (II)as a member of the nursing faculty at an accredited school of nursing (as those terms are defined in section 801 of the Public Health Service Act (42 U.S.C. 296)); and (ii)serves a low-income or needy community. (D)

Child welfare workers

An individual who— (i)has completed a degree in social work or related field with a focus on serving children and families (as determined in accordance with regulations prescribed by the Secretary); and (ii)has obtained employment in public or private child welfare services. (c)

Loan repayment

(1)

In general

The Secretary shall assume the obligation to repay a total of not more than $20,000 of principal and interest as follows: (A)after each of the first or second years of service by an individual in a qualified public service position, 15 percent of the total amount of principal and interest of the loans described in subsection (b)(1) to such individual that are outstanding immediately preceding such first year of such service; (B)after each of the third or fourth years of such service, 20 percent of such total amount; and (C)after the fifth year of such service, 30 percent of such total amount. (2)

Treatment of consolidation loans

A loan amount for a loan made under section 428C or for a Federal Direct Consolidation Loan may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a loan described in subsection (b)(1) for a borrower who meets the requirements of subsection (b), as determined in accordance with regulations prescribed by the Secretary. (3)

Construction

Nothing in this section shall be construed to authorize the refunding of any repayment of a loan made under section 428 or 428H, a Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan, a Federal Direct Loan, or a Federal Perkins Loan. (4)

Interest

If a portion of a loan is repaid by the Secretary under this section for any year, the proportionate amount of interest on such loan that accrues for such year shall be repaid by the Secretary. (5)

Ineligibility of national service award recipients

No student borrower may, for the same service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12601 et seq.). (6)

Ineligibility for double benefits

No borrower may receive a reduction of loan obligations under both this section and section 428J or 460. (7)

Continued eligibility of teachers

Any teacher who performs service in a school that— (A)meets the requirements of subsection (b)(2)(A)(ii)(I) in any year during such service; and (B)in a subsequent year fails to meet the requirements of such subsection, may continue to teach in such school and shall be eligible for loan forgiveness pursuant to subsection (b). (d)

Repayment to eligible lenders and holders

The Secretary shall pay to each eligible lender or holder for each fiscal year an amount equal to the aggregate amount of the lender’s or holder’s loans that are subject to repayment pursuant to this section for such year. (e)

Application for repayment

(1)

In general

Each eligible individual desiring loan repayment under this section shall submit a complete and accurate application to the Secretary at such time, in such manner, and containing such information as the Secretary may require. (2)

Conditions

An eligible individual may apply for loan repayment under this section after completing each of the consecutive years of qualifying service described in subsection (c)(1). The borrower may elect to receive forbearance while engaged in qualifying service described in subsection (c)(1) unless the borrower is in deferment while so engaged. (f)

Regulations

The Secretary is authorized to prescribe such regulations as may be necessary to carry out the provisions of this section. (g)

Definitions

In this section: (1)

Child welfare services

The term child welfare services has the meaning given the term in section 425 of the Social Security Act. (2)

Degree

The term degree means an associate’s or bachelor’s degree awarded by an institution of higher education. (3)

Eligible nurse

The term eligible nurse means a nurse who meets all of the following: (A)The nurse graduated from— (i)an accredited school of nursing (as those terms are defined in section 801 of the Public Health Service Act (42 U.S.C. 296)); (ii)a nursing center; or (iii)an academic health center that provides nurse training. (B)The nurse holds a valid and unrestricted license to practice nursing in the State in which the nurse practices in a clinical setting. (C)The nurse holds 1 or more of the following: (i)A graduate degree in nursing, or an equivalent degree. (ii)A nursing degree from a collegiate school of nursing (as defined in section 801 of the Public Health Service Act (42 U.S.C. 296)). (iii)A nursing degree from an associate degree school of nursing (as defined in section 801 of the Public Health Service Act (42 U.S.C. 296)). (iv)A nursing degree from a diploma school of nursing (as defined in section 801 of the Public Health Service Act (42 U.S.C. 296)). (4)

Low-income community

In this subsection, the term low-income community means a community in which 70 percent of households earn less than 85 percent of the State median household income. (5)

Year

The term year, where applied to service as a teacher (or service as a member of an accredited school of nursing (as those terms are defined in section 801 of the Public Health Service Act (42 U.S.C. 296))), means an academic year as defined by the Secretary.