[Congressional Record Volume 145, Number 30 (Thursday, February 25, 1999)]
[Senate]
[Page S2017]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Jeffords, Ms. 
        Collins, Mr. Cochran, and Mr. Abraham):
  S. 471. A bill to amend the Internal Revenue Code of 1986 to 
eliminate the 60-month limit on student loan interest deductions; to 
the Committee on Finance.


   LEGISLATION TO EXPAND THE TAX DEDUCTION FOR STUDENT LOAN INTEREST

  Mr. GRASSLEY. Mr. President, today I am introducing legislation to 
expand the tax deduction for student loan interest. Senators Baucus, 
Jeffords, Collins, Cochran and Abraham are joining me in introducing 
this legislation.
  Under the Tax Reform Act of 1986, the tax deduction for student loan 
interest was eliminated. This action, done in the name of fiscal 
responsibility, blatantly disregarded the duty we have to the education 
of our nation's students. This struck me and many of my colleagues as 
wrong. Since 1987, I have spearheaded the bipartisan effort to 
reinstate the tax deduction for student loan interest. In 1992, we 
succeeded in passing the legislation to reinstate the deduction, only 
to have it vetoed as part of a larger bill with tax increases. Finally, 
after ten long years, our determination and perseverance paid off. 
Under the Taxpayer Relief Act of 1997, we succeeded in reinstating the 
deduction. In our success, we sent a clear message to students and 
their families across the country that the Congress of the United 
States understands the financial hardships they face, and that we are 
willing to assist them in easing those hardships so they can receive 
the education they need.
  In 1997 we took steps in the right direction, and did what had to be 
done. Regrettably, due to fiscal constraints, we were not able to go as 
far as we wanted to go. The nation was still in a fiscal crisis at that 
time. In order to control costs, we were forced to limit the 
deductibility of student loan interest to only sixty loan payments, 
which is equivalent to five years plus time spent in forbearance or 
deferment.
  This restriction hurts some of the most needy borrowers. Many of 
these borrowers are students who, due to limited means, have borrowed 
most heavily. The restriction discriminates against those who have the 
highest debt loads and lowest incomes. It makes the American dream 
harder to achieve for those struggling to pull themselves up--for those 
who started with less. It is unjust.
  Today, our situation is vastly different. In these times of economic 
vitality and budget surplus, we have a responsibility to do what we 
were unable to do before. Student debt is rising to alarming levels, 
and additional relief must be provided. We must eliminate the sixty 
month restriction on the deductibility of student loan interest and 
show that the United States Congress stands behind all of our nation's 
students in their endeavors to better themselves.
  Eliminating the sixty payment restriction will bring needed relief to 
some of the most deserving borrowers. The restriction weighs heavily on 
those who, despite lower pay, have decided to dedicate themselves to a 
career in public service. We will be rewarding civic virtue as we 
provide relief to these admirable citizens.
  Additionally, eliminating this restriction will eliminate difficult 
and costly reporting requirements that are currently required for both 
borrowers and lenders. In supporting our nation's students, we will 
also be cutting costly bureaucracy.
  Currently, to claim the deduction, the taxpayer must have an adjusted 
gross income of $40,000 or less, or $60,000 for married couples. The 
amount of the deduction is gradually phased out for those with incomes 
between $40,000 and $55,000, or $60,000 and $75,000 for married 
couples. Additionally, the deduction itself was phased in at $1000, and 
will cap out at $2500 in 2002.
  Many in our country are suffering from excessive student debt. More 
can and must be done to help them. In this time of economic plenty, it 
is our duty to invest in our students' education. Doing so is an 
investment in America's future. To maintain competitiveness in the 
global marketplace, America must have a well-educated workforce. By 
eliminating the sixty payment restriction on the deductibility of 
student loan interest we recommit ourselves to education and to 
maintaining the position of this country at the pinnacle of the free 
world.
  The administration supports this direction as well. In his 2000 
budget, President Clinton has proposed to eliminate the sixty payment 
restriction on the deductibility of student loan interest, starting 
after 1999. Our legislation takes a more fair and inclusive approach by 
including payments between 1997 and 1999, which the administration 
leaves out.
  I urge members to join us in this effort to relieve the excessive 
burdens on those trying to better themselves and their families through 
education by expanding the tax deduction for student loan interest 
payments.
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