1.This Act may be cited as the
Student Debt Relief Act of
2007
.
2.Increase in Federal Pell Grants
(a)Section 401(a)(1) of the Higher Education
Act of 1965 (20 U.S.C. 1070a(a)(1)) is amended by striking 2004
and inserting 2012
.
(b)Section 401(b)(2)(A) of the Higher
Education Act of 1965 (20 U.S.C. 1070a(b)(2)(A)) is amended by striking clauses
(i) through (v) and inserting the following:
(i)$5,100 for academic year 2007–2008;
(ii)$5,400 for academic year 2008–2009;
(iii)$5,700 for academic year 2009–2010;
(iv)$6,000 for academic year 2010–2011;
and
(v)$6,300 for academic year
2011–2012,
.
(c)
(1)For an academic year, there are authorized
to be appropriated, and there are appropriated, to carry out paragraph (2) (in
addition to any other amounts appropriated to carry out section 401 of the
Higher Education Act of 1965 (20 U.S.C. 1070a) and out of any money in the
Treasury not otherwise appropriated) as follows:
(A)For academic year 2007–2008,
$4,331,000,000.
(B)For academic year 2008–2009,
$5,674,000,000.
(C)For academic year 2009–2010,
$7,050,000,000.
(D)For academic year 2010–2011,
$8,452,000,000.
(E)For academic year 2011–2012,
$9,894,000,000.
(2)The amounts made available pursuant to
paragraph (1) shall be used to increase the amount of the maximum Federal Pell
Grant under section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a)
for which funds are appropriated under appropriations Acts for a fiscal year
by—
(A)$1,050 for award year 2007–2008;
(B)$1,350 for award year 2008–2009;
(C)$1,650 for award year 2009–2010;
(D)$1,950 for award year 2010–2011; and
(E)$2,250 for award year 2011–2012.
3.Student aid reward programPart G of title IV of the
Higher Education Act of 1965 (20
U.S.C. 1088 et seq.) is amended by inserting after section 489 the
following:
489A.Student aid reward program
(a)The Secretary shall carry out a Student Aid
Reward Program to encourage institutions of higher education to participate in
the student loan program under this title that is most cost-effective for
taxpayers.
(b)In carrying out the Student Aid Reward
Program, the Secretary shall—
(1)provide to each institution of higher
education participating in the student loan program under this title that is
most cost-effective for taxpayers, a Student Aid Reward Payment, in an amount
determined in accordance with
subsection (c), to encourage the
institution to participate in that student loan program;
(2)require each institution of higher
education receiving a payment under this section to provide student loans under
such student loan program for a period of 5 years after the date the first
payment is made under this section;
(3)where appropriate, require that funds paid
to institutions of higher education under this section be used to award
students a supplement to such students’ Federal Pell Grants under subpart 1 of
part A;
(4)permit such funds to also be used to award
need-based grants to lower- and middle-income graduate students; and
(5)encourage all institutions of higher
education to participate in the Student Aid Reward Program under this
section.
(c)The amount of a Student Aid Reward Payment
under this section shall be not less than 50 percent of the savings to the
Federal Government generated by the institution of higher education’s
participation in the student loan program under this title that is most
cost-effective for taxpayers instead of the institution’s participation in the
student loan program that is not most cost-effective for taxpayers.
(d)Trigger To ensure cost neutrality
(1)Limit to ensure cost
neutralityNotwithstanding
subsection (c), the Secretary shall not
distribute Student Aid Reward Payments under the Student Aid Reward Program
that, in the aggregate, exceed the Federal savings resulting from the
implementation of the Student Aid Reward Program.
(2)In calculating Federal savings, as used in
paragraph (1), the Secretary shall
determine Federal savings on loans made to students at institutions of higher
education that participate in the student loan program under this title that is
most cost-effective for taxpayers and that, on the date of enactment of this
section, participated in the student loan program that is not most
cost-effective for taxpayers, resulting from the difference of—
(A)the Federal cost of loan volume made under
the student loan program under this title that is most cost-effective for
taxpayers; and
(B)the Federal cost of an equivalent type and
amount of loan volume made, insured, or guaranteed under the student loan
program under this title that is not most cost-effective for taxpayers.
(3)If the Federal savings determined under
paragraph (2) is not sufficient to
distribute full Student Aid Reward Payments under the Student Aid Reward
Program, the Secretary shall—
(A)first make Student Aid Reward Payments to
those institutions of higher education that participated in the student loan
program under this title that is not most cost-effective for taxpayers on the
date of enactment of this section; and
(B)with any remaining Federal savings after
making Student Aid Reward Payments under
subparagraph (A), make Student Aid
Reward Payments to the institutions of higher education eligible for a Student
Aid Reward Payment and not described in
subparagraph (A) on a pro-rata
basis.
(4)Any institution of higher education that
receives a Student Aid Reward Payment under this section—
(A)shall distribute, where appropriate, part
or all of such payment among the students of such institution who are Federal
Pell Grant recipients by awarding such students a supplemental grant;
and
(B)may distribute part of such payment as a
supplemental grant to graduate students in financial need.
(5)Estimates, adjustments, and carry
over
(A)Estimates and adjustmentsThe Secretary shall make Student Aid Reward
Payments to institutions of higher education on the basis of estimates, using
the best data available at the beginning of an academic or fiscal year. If the
Secretary determines thereafter that loan program costs for that academic or
fiscal year were different than such estimate, the Secretary shall adjust by
reducing or increasing subsequent Student Aid Reward Payments rewards paid to
such institutions of higher education to reflect such difference.
(B)Any institution of higher education that
receives a reduced Student Aid Reward Payment under
paragraph (3)(B), shall remain
eligible for the unpaid portion of such institution’s financial reward payment,
as well as any additional financial reward payments for which the institution
is otherwise eligible, in subsequent academic or fiscal years.
(e)In this section:
(1)Student loan program under this title that
is most cost-effective for taxpayersThe term student loan program under
this title that is most cost-effective for taxpayers
means the loan
program under part B or D of this title that has the lowest overall cost to the
Federal Government (including administrative costs) for the loans authorized by
such parts.
(2)Student loan program under this title that
is not most cost-effective for taxpayersThe term student loan program under
this title that is not most cost-effective for taxpayers
means the loan
program under part B or D of this title that does not have the lowest overall
cost to the Federal Government (including administrative costs) for the loans
authorized by such
parts.
.
4.
(a)
(1)Section 427A(l) of the
Higher Education Act of 1965 (20 U.S.C. 1077a(l)) is amended
by adding at the end the following:
(4)Reduced rates for undergraduate subsidized
loansNotwithstanding
subsection (h) and paragraph (1) of this subsection, with respect to any loan
to an undergraduate student made, insured, or guaranteed under this part (other
than a loan made pursuant to section 428B, 428C, or 428H) for which the first
disbursement is made on or after July 1, 2006, and before July 1, 2012, the
applicable rate of interest shall be as follows:
(A)For a loan for which the first disbursement
is made on or after July 1, 2006, and before July 1, 2007, 6.8 percent on the
unpaid principal balance of the loan.
(B)For a loan for which the first disbursement
is made on or after July 1, 2007, and before July 1, 2008, 6.12 percent on the
unpaid principal balance of the loan.
(C)For a loan for which the first disbursement
is made on or after July 1, 2008, and before July 1, 2009, 5.44 percent on the
unpaid principal balance of the loan.
(D)For a loan for which the first disbursement
is made on or after July 1, 2009, and before July 1, 2010, 4.76 percent on the
unpaid principal balance of the loan.
(E)For a loan for which the first disbursement
is made on or after July 1, 2010, and before July 1, 2011, 4.08 percent on the
unpaid principal balance of the loan.
(F)For a loan for which the first disbursement
is made on or after July 1, 2011, and before July 1, 2012, 3.40 percent on the
unpaid principal balance of the
loan.
.
(2)Special allowance cross
referenceSection
438(b)(2)(I)(ii)(II) of such Act is amended by striking section
427A(l)(1)
and inserting section 427A(l)(1) or
(l)(4)
.
(b)Direct Loan interest ratesSection 455(b)(7) of the Higher Education
Act of 1965 (20 U.S.C. 1087e(b)(7)) is amended by adding at the end the
following:
(D)Reduced rates for undergraduate
FDSLNotwithstanding the
preceding paragraphs of this subsection, for Federal Direct Stafford Loans made
to undergraduate students for which the first disbursement is made on or after
July 1, 2006, and before July 1, 2012, the applicable rate of interest shall be
as follows:
(i)For a loan for which the first disbursement
is made on or after July 1, 2006, and before July 1, 2007, 6.8 percent on the
unpaid principal balance of the loan.
(ii)For a loan for which the first disbursement
is made on or after July 1, 2007, and before July 1, 2008, 6.12 percent on the
unpaid principal balance of the loan.
(iii)For a loan for which the first disbursement
is made on or after July 1, 2008, and before July 1, 2009, 5.44 percent on the
unpaid principal balance of the loan.
(iv)For a loan for which the first disbursement
is made on or after July 1, 2009, and before July 1, 2010, 4.76 percent on the
unpaid principal balance of the loan.
(v)For a loan for which the first disbursement
is made on or after July 1, 2010, and before July 1, 2011, 4.08 percent on the
unpaid principal balance of the loan.
(vi)For a loan for which the first disbursement
is made on or after July 1, 2011, and before July 1, 2012, 3.40 percent on the
unpaid principal balance of the
loan.
.
5.Income contingent repayment for public
sector employeesSection
455(e) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by
adding at the end the following:
(7)Repayment plan for public sector
employees
(A)The Secretary shall forgive the balance due
on any loan made under this part or section 428C(b)(5) for a borrower—
(i)who has made 120 payments on such loan
pursuant to income contingent repayment; and
(ii)who is employed, and was employed for the
10-year period in which the borrower made the 120 payments described in clause
(i), in a public sector job.
(B)In this paragraph, the term public
sector job means a full-time job in emergency management, government,
public safety, law enforcement, public health, education (including early
childhood education), social work in a public child or family service agency,
or public interest legal services (including prosecution or public
defense).
(8)Return to standard repaymentA borrower who is repaying a loan made
under this part pursuant to income contingent repayment may choose, at any
time, to terminate repayment pursuant to income contingent repayment and repay
such loan under the standard repayment
plan.
.
6.
(a)Part G of title IV of the Higher Education
Act of 1965 (20 U.S.C. 1088 et seq.) is further amended by adding at the end
the following:
493C.
(a)In this section:
(1)The term excepted PLUS loan
means a loan under section 428B, or a Federal Direct PLUS Loan, that is made,
insured, or guaranteed on behalf of a dependent student.
(2)Partial financial hardshipThe term partial financial
hardship means the amount by which the annual amount due on the total
amount of loans made, insured, or guaranteed under part B or D (other than an
excepted PLUS loan) to a borrower as calculated under the standard repayment
plan under section 428(b)(9)(A)(i) or 455(d)(1)(A) exceeds 15 percent of the
result obtained by calculating the amount by which—
(A)the borrower's adjusted gross income;
exceeds
(B)150 percent of the poverty line applicable
to the borrower's family size as determined under section 673(2) of the
Community Services Block Grant Act.
(b)Fair payment assurance program
authorizedNotwithstanding
any other provision of this Act, the Secretary shall carry out a program under
which—
(1)a borrower of any loan made, insured or
guaranteed under part B or D (other than an excepted PLUS loan) who has a
partial financial hardship may elect, during any period the borrower has the
partial financial hardship, to have the borrower's aggregate monthly payment
for all such loans not exceed 15 percent of the result described in subsection
(a)(2) divided by 12;
(2)the holder of such a loan shall apply the
borrower's monthly payment under this subsection first toward interest due on
the loan and then toward the principal of the loan;
(3)any interest due and not paid under
paragraph (2)—
(A)in the case of a Federal Stafford Loan or
Federal Direct Stafford Loan, shall be paid by the Secretary; or
(B)in the case of any other loan under part B
or D (other than a loan described in subparagraph (A) or an excepted PLUS
loan), shall be capitalized;
(4)any principal due and not paid under
paragraph (2) shall be deferred in the same manner as deferments under section
428(b)(1)(M);
(5)the amount of time the borrower makes
monthly payments under paragraph (1) may exceed 10 years;
(6)if the borrower no longer has a partial
financial hardship or no longer wishes to continue the election under this
subsection, then—
(A)the maximum monthly payment required to be
paid for all loans made to the borrower under part B or D (other than an
excepted PLUS loan) shall not exceed the monthly amount calculated under
section 428(b)(9)(A)(i) or 455(d)(1)(A) when the borrower first made the
election described in this subsection; and
(B)the amount of time the borrower is
permitted to repay such loans may exceed 10 years; and
(7)the Secretary shall repay or cancel any
outstanding balance of principal and interest due on all loans made under part
B or D (other than an excepted PLUS Loan) to a borrower who—
(A)is in deferment due to an economic hardship
described in section 435(o) for a period of time prescribed by the Secretary,
not to exceed 25 years; or
(B)(i)makes the election under this subsection;
and
(ii)for a period of time prescribed by the
Secretary, not to exceed 25 years (including any period during which the
borrower is in deferment due to an economic hardship described in section
435(o)), meets any 1 or more of the following requirements:
(I)Has made reduced monthly payments under
paragraph (1).
(II)Has made monthly payments of not less than
the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A)
when the borrower first made the election described in this subsection.
(III)Has made payments under a standard
repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A).
(IV)Has made payments under an income
contingent repayment plan under section
455(d)(1)(D).
.
(b)Section 455(d)(1)(D) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(d)(1)(D)) is amended by inserting
made on behalf of a dependent student
after PLUS
loan
.
7.Definition of economic
hardshipSection 435(o) of the
Higher Education Act of 1965 (20 U.S.C. 1085(o)) is amended—
(1)in paragraph (1)—
(A)in subparagraph (A)(ii), by striking
100 percent of the poverty line for a family of 2
and inserting
150 percent of the poverty line applicable to the borrower's family
size
;
(B)by striking subparagraph (B); and
(C)by redesignating subparagraph (C) as
subparagraph (B); and
(2)in paragraph (2), by striking
(1)(C)
and inserting (1)(B)
.
8.
(a)Section 427(a)(2)(C)(iii) of the Higher
Education Act of 1965 (20 U.S.C. 1077(a)(2)(C)(iii)) is amended by striking
not in excess of 3 years
.
(b)Section 428(b)(1)(M)(iv) of the Higher
Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)(iv)) is amended by striking
not in excess of 3 years
.
(c)Section 455(f)(2)(D) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(f)(2)(D)) is amended by striking
not in excess of 3 years
.
(d)Section 464(c)(2)(A)(iv) of the Higher
Education Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)(iv)) is amended by striking
not in excess of 3 years
.
9.
(a)Section 455(e) of the Higher Education Act
of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the end the
following:
(7)In calculating the extended period of time
for which an income contingent repayment plan under this subsection may be in
effect for a borrower, the Secretary shall include all time periods during
which a borrower of loans under part B, part D, or part E—
(A)is not in default on any loan that is
included in the income contingent repayment plan; and
(B)(i)is in deferment due to an economic hardship
described in section 435(o);
(ii)makes monthly payments under paragraph (1)
or (6) of section 493C(b); or
(iii)makes payments under a standard repayment
plan described in section 428(b)(9)(A)(i) or subsection
(d)(1)(A).
.
(b)Section 455(d)(1)(C) (20 U.S.C.
1087e(d)(1)(C)) is amended by striking 428(b)(9)(A)(v)
and
inserting 428(b)(9)(A)(iv)
.
10.Section 428(b)(7)(A) of the Higher Education
Act of 1965 (20 U.S.C. 1078(b)(7)(A)) is amended by striking shall
begin
and all that follows through the period and
inserting
shall
begin—(i)the day after 6 months after the date the
student ceases to carry at least one-half the normal full-time academic
workload (as determined by the institution); or
(ii)on an earlier date if the borrower requests
and is granted a repayment schedule that provides for repayment to commence at
an earlier
date.
.
11.Consolidation loan changesSection 428C(a)(3) of the Higher Education
Act of 1965 (20 U.S.C. 1078–3(a)(3)) is amended to read as follows:
(3)Definition of eligible
borrowerFor the purpose of
this section, the term eligible borrower means a borrower
who—
(A)is not subject to a judgment secured
through litigation with respect to a loan under this title or to an order for
wage garnishment under section 488A; and
(B)at the time of application for a
consolidation loan—
(i)is in repayment status as determined under
section 428(b)(7)(A);
(ii)is in a grace period preceding repayment;
or
(iii)is a defaulted borrower who has made
arrangements to repay the obligation on the defaulted loans satisfactory to the
holders of the defaulted
loans.
.
12.Reduction of Direct Loan origination
feesSection 455(c) of the
Higher Education Act of 1965 (20 U.S.C. 1087e(c)) is amended—
(1)in paragraph (1)—
(A)by striking 4.0 percent
and
inserting 3.0 percent
; and
(B)by striking shall
and
inserting is authorized to
; and
(2)in paragraph (2)—
(A)in subparagraph (A), by striking
3.0 percent
for 4.0 percent
and
inserting 2.0 percent
for 3.0
percent
;
(B)in subparagraph (B), by striking
2.5 percent
for 4.0 percent
and
inserting 1.5 percent
for 3.0
percent
;
(C)in subparagraph (C), by striking
2.0 percent
for 4.0 percent
and
inserting 1.0 percent
for 3.0
percent
;
(D)in subparagraph (D), by striking
1.5 percent
for 4.0 percent
and
inserting 0.5 percent
for 3.0
percent
; and
(E)in subparagraph (E), by striking
1.0 percent
for 4.0 percent
and
inserting 0.0 percent
for 3.0
percent
.
13.Administrative account for direct loan
programSection 458 of the
Higher Education Act of 1965 (20 U.S.C. 1087h) is amended—
(1)in subsection (a)—
(A)by striking paragraphs (2) and (3) and
inserting the following:
(2)Mandatory funds for fiscal years 2007
through 2011Each fiscal year
there shall be available to the Secretary, from funds not otherwise
appropriated, funds to be obligated for—
(A)administrative costs under this part and
part B, including the costs of the direct student loan programs under this
part; and
(B)account maintenance fees payable to
guaranty agencies under part B and calculated in accordance with subsection
(b),
not to exceed (from such funds not
otherwise appropriated) $904,000,000 (less any amounts previously appropriated
for the costs and fees described this paragraph for fiscal year 2007) for
fiscal year 2007, $943,000,000 for fiscal year 2008, $983,000,000 for fiscal
year 2009, $1,023,000,000 for fiscal year 2010, $1,064,000,000 for fiscal year
2011, and $1,106,000,000 for fiscal year
2012.;
(B)by redesignating paragraphs (4) and (5) as
paragraphs (3) and (4), respectively; and
(C)in paragraph (3) (as redesignated in
subparagraph (B)), by striking paragraph (3)
and inserting
paragraph (2)
; and
(2)in subsection (b), by striking
(a)(3)
and inserting (a)(2)
.
14.College tuition deduction and credit for
interest on higher education loans
(a)Expansion of deduction for higher education
expenses
(1)Subsection (b) of section 222 of the
Internal Revenue Code of 1986 (relating to deduction for qualified tuition and
related expenses) is amended to read as follows:
(b)
(1)
(A)Except as provided in paragraph (2), the
amount allowed as a deduction under subsection (a) with respect to the taxpayer
for any taxable year shall not exceed the applicable dollar limit.
(B)The applicable dollar limit for any taxable
year shall be determined as follows:
Applicable
Taxable year:dollar amount:
2007$8,000
2008 and thereafter$12,000.
(2)Limitation based on modified adjusted gross
income
(A)The amount which would (but for this
paragraph) be taken into account under subsection (a) shall be reduced (but not
below zero) by the amount determined under subparagraph (B).
(B)The amount determined under this
subparagraph equals the amount which bears the same ratio to the amount which
would be so taken into account as—
(i)the excess of—
(I)the taxpayer’s modified adjusted gross
income for such taxable year, over
(II)$65,000 ($130,000 in the case of a joint
return), bears to
(ii)$15,000 ($30,000 in the case of a joint
return).
(C)Modified adjusted gross
incomeFor purposes of this
paragraph, the term modified adjusted gross income means the
adjusted gross income of the taxpayer for the taxable year determined—
(i)without regard to this section and sections
199, 911, 931, and 933, and
(ii)after the application of sections 86, 135,
137, 219, 221, and 469.
For purposes of the sections
referred to in clause (ii), adjusted gross income shall be determined without
regard to the deduction allowed under this section.(D)
(i)In the case of any taxable year beginning
in a calendar year after 2007, both of the dollar amounts in subparagraph
(B)(i)(II) 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 calendar year 2006
for calendar year
1992
in subparagraph (B) thereof.
(ii)If any amount as adjusted under clause (i)
is not a multiple of $50, such amount shall be rounded to the nearest multiple
of
$50.
.
(2)Qualified tuition and related expenses of
eligible students
(A)Section 222(a) of the Internal Revenue Code
of 1986 (relating to allowance of deduction) is amended by inserting of
eligible students
after expenses
.
(B)Definition of eligible
studentSection 222(d) of
such Code (relating to definitions and special rules) is amended by
redesignating paragraphs (2) through (6) as paragraphs (3) through (7),
respectively, and by inserting after paragraph (1) the following new
paragraph:
(2)The term eligible student has
the meaning given such term by section
25A(b)(3).
.
(3)Title IX of the Economic Growth and Tax
Relief Reconciliation Act of 2001 (relating to sunset of provisions of such
Act) shall not apply to the amendments made by section 431 of such Act.
(4)The amendments made by
this subsection shall apply to payments made in taxable years beginning after
December 31, 2006.
(b)Credit for interest on higher education
loans
(1)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 25D the following new
section:
25E.Interest on higher education loans
(a)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)
(1)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)If the modified adjusted gross income of
the taxpayer for the taxable year exceeds $50,000 ($100,000 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 ($40,000 in the case of a joint return).
(B)Modified adjusted gross
incomeThe term
modified adjusted gross income means adjusted gross income
determined without regard to sections 199, 222, 911, 931, and 933.
(C)In the case of any taxable year beginning
after 2007, the $50,000 and $100,000 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 2006
for 1992
.
(D)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
creditNo 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
allowedA 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)For purposes of this section—
(1)The term qualified education
loan has the meaning given such term by section 221(d)(1).
(2)The term dependent has the
meaning given such term by section 152.
(f)
(1)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
returnIf 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 shall
be determined in accordance with section
7703.
.
(2)The table of sections for subpart A of part
IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended
by inserting after the item relating to section 25D the following new
item:
Sec. 25E. Interest on higher
education
loans.
.
(3)The amendments made by
this section shall apply to any qualified education loan (as defined in section
25E(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, 2006.