[Congressional Record Volume 145, Number 107 (Tuesday, July 27, 1999)]
[Senate]
[Pages S9388-S9389]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. GRASSLEY (for himself and Mr. Burns):
  S. 1444. A bill to amend the Internal Revenue Code of 1986 to 
eliminate the 60-month limit and increase the income limitation on the 
student loan interest deduction; to the Committee on Finance.


            Expansion of the Student Loan Interest Deduction

  Mr. GRASSLEY. Mr. President, I am joined today by Senator Burns 
introducing legislation to expand the student loan interest deduction. 
Specifically, my bill will repeal the sixty-month payment limitation 
and increase the income levels qualifying students for the tax 
deduction for student loan interest. I previously presented the 
elimination of the sixty-month student loan deductibility restriction 
in a bill in February. As a member of the Finance Committee, I have 
asked that both it and the income limit expansion I now propose be 
included in the Reconciliation bill that will be before the Senate this 
week. I am happy to report that both are in the committee reported 
bill.
  In a move detrimental to the education of our nation's students, the 
Tax Reform Act of 1986 eliminated the tax deduction for student loan 
interest. Deeply troubled that this important relief was no longer 
available to young women and men trying to start their careers, since 
1987 my colleagues on both sides of the aisle and I have sought to ease 
the heavy burden of paying back student loans by reinstating the tax 
deduction. In 1992, we succeeded in passing legislation to restore the 
deduction for student loan interest, only to be stymied by a veto as 
part of a larger bill with tax increases. After ten arduous years, our 
persistent work on behalf of America's students finally came to 
fruition when we succeeded in reinstating the deduction under the 
Taxpayer Relief Act of 1997. Our victory demonstrated Congress' sincere 
commitment to making educational opportunities available to all 
students and families across the nation, and confirmed our willingness 
to assist young Americans in acquiring the best education possible by 
easing the financial hardship they face.
  While our endeavors in 1997 were progressive, we were unable to go as 
far as we wanted to go due to financial constraints. Because the nation 
was still in a fiscal crisis at that time, we were compelled to limit 
the deductibility of student loan interest to sixty payments, and to 
only those taxpayers with an adjusted gross income of between $40,000 
and $55,000 filing individually or between $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.
  In keeping the income limits for the deduction at such low income 
levels, we are letting a great opportunity to assist more young 
Americans pass us by. Setting the income cap at the current low mark 
does a disservice to some of our nation's most needy collegiate 
borrowers. A great number of students are forced to borrow heavily to 
acquire an education that will allow them to stay competitive in our 
global economy. The present income restriction punishes resourceful 
students who land jobs which pay salaries slightly above the meager 
cap, even though they may have been forced to borrow heavily to obtain 
their education due to limited means.
  Currently, the deductibility of student loan interest is limited to a 
mere sixty loan payments, equivalent to five years plus time spent in 
forbearance or deferment. This payment limitation, like the income 
restriction, was put in place during our fiscal difficulties of 1997. 
Since we are now experiencing a great budget surplus with our booming 
economy, Congress now has the ability to expand on both of these areas 
where previously we were forced to scale back. As mentioned, I already 
introduced a bill, S. 471, that would eliminate the 60-month limit on 
student loan interest reductions.
  Fortunately, our situation today is quite different than when we made 
our original improvements in 1997. Now, with our robust economy and 
budget surplus, we have a splendid opportunity to do what we were 
unable to do before. As the price of going to college has continued to 
spiral upward, student debt has risen to appalling levels. We must not 
shrink from our responsibility to provide additional relief to our 
students. We should repeal the sixty-month payment limitation. We 
should increase the income levels from $40,000 to $50,000 for single 
students, and, eliminating any marriage penalty, increase from $60,000 
to $100,000 for married couples. The amount of the deduction would then 
be gradually phased out for taxpayers with incomes between $50,000 and 
$65,000 filing individually and between $100,000 and $115,000 for 
married couples. Let our actions clearly demonstrate that the United 
States Congress stands behind

[[Page S9389]]

all of our nation's students in their efforts to better their lives.
  By expanding the student loan interest deduction, we will bring vital 
relief to some of our most deserving borrowers seeking the American 
dream. Rather than penalizing resourceful students who find jobs with 
incomes above the present cap, we will be rewarding the hard work and 
ingenuity of our students. We must continue to support young Americans 
who land jobs with salaries slightly above our current threshold yet 
still needing financial assistance.
  Excessive student debt is a major problem for many students. As 
people in a position to help them, Congress must seek out more ways to 
be of service to our young people. In this time of economic plenty, it 
is our duty to invest in our students' education, for to do so is an 
investment in America's future. A well-deducted workforce is vital to 
maintain competitiveness in an ever-changing global economy. By 
broadening the income limits to receive the tax deduction for student 
loan interest, we demonstrate our commitment to education and 
maintaining the position of the United States at the pinnacle of the 
free world.
  I urge my colleagues to join me in this effort to relieve the 
excessive burdens on those trying to better themselves and their 
families through education by loosening the income limits to quality 
for the tax deduction for student loan interest payments and 
eliminating the sixty-month payment limitation.
                                 ______