[Congressional Record Volume 149, Number 25 (Tuesday, February 11, 2003)]
[Senate]
[Pages S2207-S2208]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SCHUMER (for himself, Mr. Biden, Ms. Snowe, Mr. Bayh, Mr. 
        Smith, and Mr. Durbin):
  S. 348. A bill to amend the Internal Revenue Code of 1986 to make 
higher education more affordable, and for other purposes; to the 
Committee on Finance.
  Mr. SCHUMER. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 348

       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 2003''.

     SEC. 2. EXPANSION OF DEDUCTION FOR HIGHER EDUCATION EXPENSES.

       (a) Amount of Deduction.--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) Limitations.--
       ``(1) Dollar limitations.--
       ``(A) In general.--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) Applicable dollar limit.--The applicable dollar limit 
     for any taxable year shall be determined as follows:

                                                             Applicable
``Taxable year:                                          dollar amount:
  2003......................................................$8,000 ....

  2004 and thereafter......................................$12,000.....

       ``(2) Limitation based on modified adjusted gross income.--
       ``(A) In general.--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) Amount of reduction.--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 income.--For 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 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) Inflation adjustments.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2003, 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 2002' for 
     `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding.--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.''.
       (b) Qualified Tuition and Related Expenses of Eligible 
     Students.--
       (1) In general.--Section 222(a) of the Internal Revenue 
     Code of 1986 (relating to allowance of deduction) is amended 
     by inserting ``of eligible students'' after ``expenses''.
       (2) Definition of eligible student.--Section 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) Eligible student.--The term `eligible student' has 
     the meaning given such term by section 25A(b)(3).''.
       (c) Deduction Made Permanent.--Title IX of the Economic 
     Growth and Tax Relief Reconciliation Act of 2001 (relating to 
     sunset of

[[Page S2208]]

     provisions of such Act) shall not apply to the amendments 
     made by section 431 of such Act.
       (d) Effective Date.--The amendments made by this section 
     shall apply to payments made in taxable years beginning after 
     December 31, 2002.

     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 25B the following new section:

     ``SEC. 25C. 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 ($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 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 2003, 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 `2002' 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 of the 
     Internal Revenue Code of 1986 is amended by inserting after 
     the item relating to section 25B the following new item:

``Sec. 25C. 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 25C(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, 2002.

  Mr. BIDEN. Mr. President, I am pleased once again to join my 
colleague from New York, Senator Schumer, to talk about a bill that 
will help American families afford their children's college tuition. 
The bill we are reintroducing today, the Make College Affordable Act, 
will make up to $12,000 in college tuition tax deductible each year, 
while providing graduates with a tax credit to reduce the cost of their 
student loans.
  With the average college graduate earning 80 percent more than the 
average non-college, high school graduate, it is abundantly clear that 
in today's economy a college degree is an absolute necessity. When I 
went to college, it cost about $1,000 a year. That meant, for a family 
making about $12,000 a year, the cost of college was about 6 or 7 
percent of that family's income. Today the average cost of room, board 
and tuition at a four-year public college has jumped to over $9,000 a 
year. The average cost of room, board and tuition at a private four-
year college has jumped to over $25,000. What does this mean? This 
means that hard working American families are spending a larger 
percentage of their income than ever before to send their children to 
school. To attend my alma mater, the University of Delaware, it costs 
nearly 20 percent of a Delaware family's average annual income to cover 
costs. If that same family wants to send their child to a private 
university, approximately 50 percent of their income is required. This 
means that the average American family is likely to spend just as much, 
if not more, on their child's tuition as they are to pay in annual 
mortgage payments.
  I have said it before. How can we expect families to dream of a 
better and brighter future for their children, when the cost of 
attending even some public universities rivals their home mortgage 
payments? We can't.
  That is why in 1995, I first offered an amendment to permit a $10,000 
tuition tax deduction. That is why in 1996 and 1997, I introduced my 
GET AHEAD bill which would have provided students and their families 
with scholarships, tax deductions, and college savings plans. We've 
made some good progress. A number of initiatives were incorporated into 
the 1997 tax bill. Today families have available to them the Hope 
Scholarship--a tax credit of up to $1,500 for the first two years of 
college, and the Lifetime Learning Credit--which permits a 20 percent 
tax credit on up to $10,000 worth of higher education expenses. 
Students can also claim a tax deduction for interest on student loans, 
have the opportunity to consolidate their student loans at low interest 
rates and beginning in 2001, have had the chance to deduct up to $3,000 
in tuition expenses from their Federal income tax.
  And yet, we can and should do more to help qualified students attend 
the college of their dreams. This is why I introduced my Tuition 
Assistance for Families Act in January. This bill would expand current 
tuition tax credits, provide merit scholarships to graduating seniors, 
increase the maximum Pell Grant and raise the tuition tax deduction 
much like the bill before us today.
  I join my friend from New York today to introduce the Make College 
Affordable Act because it will allow most taxpayers to take up to a 
$12,000 tax deduction each year for college tuition and fees. For some 
families this would amount to a tax savings of more than $3,000 each 
year--$3,000 that can go toward their children's doctor visits, 
retirement savings, child care costs and yes, toward their annual 
mortgage payment.
  In addition to the tax deduction, the Schumer-Biden bill will provide 
a tax credit of up to $1,500 for the interest paid on student loans 
over the first five years of repayment. This credit will be available 
to individuals with incomes of up to $50,000, and families with incomes 
up to $100,000. When one considers that the average graduate is $16,928 
in debt, you can imagine how quickly interest payments add up each 
year.
  We are hearing a great deal these days about tax cuts. How we choose 
to provide them, and who we choose to provide them to, is a reflection 
of our nation's priorities and values. What greater priority could 
there be than providing our children with a first class education. 
Let's be smart about our investments when considering the tax proposals 
that come before us. Let's help families provide their children with a 
better life through the promise of a college education. And let's not 
forget that the Make College Affordable Act will not only ensure a 
brighter future for all our children, it will help to guarantee an 
educated and prosperous America down the road.
                                 ______