[Congressional Record Volume 151, Number 115 (Wednesday, September 14, 2005)]
[Senate]
[Page S10039]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. SMITH (for himself and Mr. Bingaman):
S. 1697. A bill to amend the Internal Revenue Code of 1986 to allow
the Hope Scholarship Credit to cover fees, books, supplies, and
equipment and to exempt Federal Pell Grants and Federal supplemental
educational opportunity grants from reducing expenses taken into
account for the Hope Scholarship Credit; to the Committee on Finance.
Mr. BINGAMAN. Mr. President, Senator Smith and I are introducing
legislation today that would allow more students in our Nation to take
full advantage of the Hope Scholarship Tax Credit.
Since it was signed into law by President Clinton in 1997, the Hope
Scholarship Tax Credit has annually helped millions of students reduce
the cost of going to college. In 2003 alone, more than 7.3 million
college students claimed this and the Lifetime Learning tax credit.
This credit, which can be as much as $1,500, has helped families offset
the increasing cost of college--costs that have gone up 51 percent at
public 4-year colleges, 36 percent at private 4-year colleges and 26
percent at public 2-year colleges over the past decade.
Unfortunately, many students and their families are unable to take
advantage of the maximum amount of the credit because it is limited to
covering ``tuition and related expenses.'' Students that attend
colleges with lower tuition costs, such as those at many of our
Nation's community colleges, are not entitled to the maximum amount of
the credit. As we all know, tuition is just one of the many expenses
associated with going to college. Room, board, books, supplies,
equipment and fees can be prohibitively expensive for those who attend
colleges that have reasonable tuition charges.
The bill addresses this inequity, by allowing the Hope scholarship
tax credit to cover expenses associated with fees, books, supplies, and
equipment. To limit the bill's cost, a student's room, board and
related expenses would remain excluded. It is important to note that
the Tax Code commonly recognizes non-tuition expenses, including
substantial living expenses, in programs such as section 529 plans and
tax-exempt, pre-paid tuition plans. Our bill, reasonably, covers a much
more limited subset of these same expenses.
In addition, the legislation changes the Tax Code so that any Federal
Pell grants and Federal Supplemental Educational Opportunity Grants
students receive are not counted against their eligible expenses when
Hope eligibility is calculated. This change will provide some
assistance to needier students, especially those attending 4-year
public colleges. However, since the Hope tax credit will remain non-
refundable, the costs of these changes will remain low.
Both of these modest changes will make college more affordable to
many students and families that do not currently benefit from many of
the other tax provisions that are targeted to more wealthy families.
For many of these students, the ability to get the maximum amount of
the tax credit may be the difference in the student being able to take
an additional class or not having to sit out a semester.
This legislation is supported by the American Council on Education,
the United States Student Association, the American Association of
Community Colleges, the American Association of State Colleges and
Universities, the National Association of State Universities and Land
Grant Colleges, the Association of Jesuit Colleges and Universities,
the Hispanic Association of Colleges and Universities, and a number of
other prominent higher education organizations.
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