[Congressional Record Volume 153, Number 13 (Tuesday, January 23, 2007)]
[Senate]
[Pages S912-S914]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself and Mr. Smith):
  S. 360. A bill to amend the Internal Revenue Code of 1986 to expand 
expenses which qualify for the Hope Scholarship Credit and to make the 
Hope Scholarship Credit and the Lifetime Learning Credit refundable; to 
the Committee on Finance.
  Mr. BINGAMAN. Mr. President, I rise today with Senator Smith to 
introduce the Greater Access To Education, or GATE Act, of 2007. This 
legislation would amend the Internal Revenue Code of 1986 in order to 
make college more affordable, and thus provide greater access to 
postsecondary education for lower income students and working families. 
Simply put, this bill would expand expenses which qualify for the Hope 
Scholarship Credit, prevent aid for needy students from reducing the 
credit, and make the Hope Scholarship and Lifetime Learning Credits 
refundable.
  The cost of attending college in the U.S. has grown by 44 percent 
since 2000, far outpacing the median growth in income. We've seen a 35 
percent jump in inflation-adjusted average tuition and fees for in-
state students at public colleges and universities since 2001-02. The 
cost of going to college is 6.3 percent higher than just last year, 
averaging $12,796 including room and board.
  Unfortunately, year after year, Congress has failed to raise Pell 
Grant Scholarships for needy students. This critical student aid has 
been frozen at just over $4000 for four years. Ten years ago, the 
maximum Pell Grant covered more than 50 percent of the cost of tuition, 
fees, room and board at a public four-year college. Last year, it 
covered only 35 percent of those costs.
  At the same time, we're seeing increasing competition among colleges 
and universities for the highest scoring students. And these students 
command higher tuition discounts, particularly in the form of merit 
scholarships. As a result, there's a smaller proportion of the 
financial aid budget available for low income students at colleges with 
rising tuitions.
  A recent report by Education Trust found that many of the flagship 
and research-extensive public universities have reallocated financial 
aid resources away from the low income students who need help to go to 
college--mostly to compete for high income students who would enroll in 
college regardless of the amount of aid they receive. Between 1995 and 
2003, flagship and other research-extensive public universities 
actually decreased grant aid by 13 percent for students from families 
with an annual income of $20,000 or less while they increased aid to 
students from families who make more than $100,000 by 406 percent. In 
2003, these institutions spent a combined $257 million to subsidize the 
tuition of students from families with annual incomes over $100,000--a 
staggering increase from the $50 million they spent in 1995.
  In addition, many colleges and universities are now using 
``enrollment and revenue management'' firms to help manage admissions 
and financial aid. I am concerned that too many schools are trying to 
leverage their financial aid to entice wealthier and high scoring 
students to attend their schools, at the expense of aid to lower

[[Page S913]]

income students. In essence, they're directing financial aid dollars to 
students who will increase a school's revenues and rankings.
  As a result, low income students are disproportionately bearing the 
brunt of increased college tuition and fees. In turn, more and more 
students increasingly rely on loans to finance their education. And, 
we've seen a significant increase in the amount of student debt in this 
country. In New Mexico, the average student now graduates from 4 years 
of college with more than $16,000 in debt.
  And, last year, Congress cut $12 billion out of the Federal student 
aid programs, pushing college further out of reach for American 
families. It is the largest single cut the Federal Government has made 
to student aid programs, and it is expected to increase the debt burden 
of students and their families as many borrowers of student loans will 
face higher interest payments.
  Congress, simply, has moved in the wrong direction, and failed to 
help make college more affordable for students from low income and 
working families.
  Full time students receive about $3,100 per year in aid in the form 
of grants and tax benefits at 4-year public institutions. In 2003-04, 
however, only 56 percent of 4-year public institution students from 
families with incomes below $30,000 received sufficient grant aid and 
tax benefits to cover tuition and fees.
  Even worse, we know that each year there are hundreds of thousands of 
students who are prepared to attend a 4-year college but do not do so 
because of financial barriers.
  We must reverse this course and make college more affordable for 
students from low-income and working families.
  The first priority for this Congress should be to increase student 
aid for needy students. We must increase the amount of Pell grants to 
at least $5,100.
  The next thing we should do is make sure that the existing education 
tax credits work effectively for the families that need them most. The 
Hope Scholarship and Lifetime Learning tax credits have helped millions 
of Americans finance their college education. For this tax year, the 
credits allow eligible tax filers to reduce their tax liability by 
receiving a credit of up to $1,650 for the Hope program or up to $2,000 
for the Lifetime Learning credit for tuition and course-related fees 
paid for a single student.
  Unfortunately, research shows that these tax credits are not working 
as effectively as they could be. They do not support students who are 
currently enrolled in college to any significant degree, and they do 
not induce greater numbers of students, including working adults who 
need to upgrade their education and skills, to earn a postsecondary 
degree.
  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 who attend colleges with 
lower tuition costs, such as those attending community colleges, are 
not entitled to the maximum amount of the credit.
  For college students attending institutions with relatively high 
tuition rates, the maximum credit will be available to cover the higher 
tuition. This is not the case, however, for many students, particularly 
the vast majority of community college students, as well as hundreds of 
thousands of students attending public four-year colleges, who attend 
college where the tuition is lower. These students are not able to 
access the full credit because tuition at these institutions is lower 
than the maximum credit, and the scope of the credit is limited to 
tuition and related expenses. College students must pay for much more 
than just tuition, however, including room and board, books, supplies, 
equipment and fees.
  Further, a student's eligibility for the Hope tax credit is actually 
reduced by any grants the student receives--Federal, State, or private. 
The impact of this limitation is felt particularly by the by the low 
income students that receive Pell Grants or other Federal or State 
assistance. Often, the assistance received fully offsets the amount of 
the credit.
  This legislation is simple and straightforward, and is crafted to 
address these shortcomings. First, in addition to tuition, it allows 
the Hope credit to cover room and board, required fees, books, 
supplies, and equipment. It is important to note that the IRS Code 
commonly recognizes non-tuition expenses, including substantial living 
expenses, in programs such as Section 529 plans and tax-exempt, pre-
paid tuition plans.
  As we all know, tuition is just one of the many expenses associated 
with going to college. Room and board, books, supplies, equipment and 
fees can be prohibitively expensive for those who attend colleges that 
have reasonable tuition charges. The cost for books and supplies alone 
can be as high as $1000 per year.
  In addition, the legislation changes the IRS Code so that any Federal 
Pell Grants and 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 four-year public colleges.
  But these fixes only get to a part of the problem. Because the 
education tax credits are not refundable, a family of four must earn 
above $30,000 to get the maximum credit. A student or working family 
must have a positive tax liability to receive the credit. Nearly half 
of all families with college students do not get the full credit 
because their income is too low.
  In fact, only 36 percent of filers claiming the credits at all had 
incomes under $30,000; less than 10 percent of filers claiming the 
credits had incomes under $15,000. By contrast, 36 percent of filers 
claiming the credits earned $50,000 or more.
  Making the credits refundable would ensure that families in lower tax 
brackets are eligible for the maximum benefits and would thus make 
college more affordable to those students and families who need the 
most assistance.
  I believe we all can agree that maintaining a skilled and educated 
workforce should rank as one of our highest priorities. The National 
Academy of Sciences projected that while the U.S. economy is doing well 
today, current trends indicate that the U.S. may not fare as well in 
the future, particularly in the areas of science and technology, where 
innovation is spurred and high-wage jobs follow.
  This Congress should do everything in its power to ensure that every 
capable student who wants to go to college should be able to, which 
will in turn ensure that we have workers to fill the high-quality, 
high-wage jobs we are working so hard to create. I urge my colleagues 
to support this critical legislation.
  I ask unanimous consent that the text of this bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 360

       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 ``Greater Access To Education 
     Act of 2007''.

     SEC. 2. EXPANSION OF EDUCATIONAL EXPENSES ALLOWED AS PART OF 
                   HOPE SCHOLARSHIP CREDIT.

       (a) Qualified Tuition and Related Expenses Expanded to 
     Include Room and Board, Books, Supplies, and Equipment.--
     Paragraph (1) of section 25A(f) of the Internal Revenue Code 
     of 1986 (defining qualified tuition and related expenses) is 
     amended by adding at the end the following new subparagraph:
       ``(D) Additional expenses allowed for hope scholarship 
     credit.--For purposes of the Hope Scholarship Credit, such 
     term shall, with respect to any academic period, include--
       ``(i) reasonable costs for such period incurred by the 
     eligible student for room and board while attending the 
     eligible educational institution, and
       ``(ii) fees, books, supplies, and equipment required for 
     such period for courses of instruction at the eligible 
     educational institution.''.
       (b) Hope Scholarship Credit Not Reduced by Federal Pell 
     Grants and Supplemental Educational Opportunity Grants.--
     Subsection (g) of section 25A of such Code (relating to 
     special rules) is amended by adding at the end the following 
     new paragraph:
       ``(8) Pell and seog grants.--For purposes of the Hope 
     Scholarship Credit, paragraph (2) shall not apply to amounts 
     paid for an individual as a Federal Pell Grant or a Federal 
     supplemental educational opportunity grant

[[Page S914]]

     under subparts 1 and 3, respectively, of part A of title IV 
     of the Higher Education Act of 1965 (20 U.S.C. 1070a and 
     1070b et seq., respectively).''.
       (c) Expanded Hope Expenses Not Subject to Information 
     Reporting Requirements.--Subsection (e) of section 6050S of 
     such Code (relating to definitions) is amended by striking 
     ``subsection (g)(2)'' and inserting ``subsections (f)(1)(D) 
     and (g)(2)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to expenses paid after December 31, 2006 (in tax 
     years ending after such date), for education furnished in 
     academic periods beginning after such date.

     SEC. 3. HOPE AND LIFETIME LEARNING CREDITS TO BE REFUNDABLE.

       (a) Credit To Be Refundable.--Section 25A of the Internal 
     Revenue Code of 1986 (relating to Hope and Lifetime Learning 
     credits), as amended by section 2, is hereby moved to subpart 
     C of part IV of subchapter A of chapter 1 of such Code 
     (relating to refundable credits) and inserted after section 
     35.
       (b) Technical Amendments.--
       (1) Section 36 of the Internal Revenue Code of 1986 is 
     redesignated as section 37.
       (2) Section 25A of such Code (as moved by subsection (a)) 
     is redesignated as section 36.
       (3) Paragraph (1) of section 36(a) of such Code (as 
     redesignated by paragraph (2)) is amended by striking ``this 
     chapter'' and inserting ``this subtitle''.
       (4) Subparagraph (B) of section 72(t)(7) of such Code is 
     amended by striking ``section 25A(g)(2)'' and inserting 
     ``section 36(g)(2)''.
       (5) Subparagraph (A) of section 135(d)(2) of such Code is 
     amended by striking ``section 25A'' and inserting ``section 
     36''.
       (6) Section 221(d) of such Code is amended--
       (A) by striking ``section 25A(g)(2)'' in paragraph (2)(B) 
     and inserting ``section 36(g)(2)'',
       (B) by striking ``section 25A(f)(2)'' in the matter 
     following paragraph (2)(B) and inserting ``section 
     36(f)(2)'', and
       (C) by striking ``section 25A(b)(3)'' in paragraph (3) and 
     inserting ``section 36(b)(3)''.
       (7) Section 222 of such Code is amended--
       (A) by striking ``section 25A'' in subparagraph (A) of 
     subsection (c)(2) and inserting ``section 36'',
       (B) by striking ``section 25A(f)'' in subsection (d)(1) and 
     inserting ``section 36(f)'', and
       (C) by striking ``section 25A(g)(2)'' in subsection (d)(1) 
     and inserting ``section 36(g)(2)''.
       (8) Section 529 of such Code is amended--
       (A) by striking ``section 25A(g)(2)'' in subclause (I) of 
     subsection (c)(3)(B)(v) and inserting ``section 36(g)(2)'',
       (B) by striking ``section 25A'' in subclause (II) of 
     subsection (c)(3)(B)(v) and inserting ``section 36'', and
       (C) by striking ``section 25A(b)(3)'' in clause (i) of 
     subsection (e)(3)(B) and inserting ``section 36(b)(3)''.
       (9) Section 530 of such Code is amended--
       (A) by striking ``section 25A(g)(2)'' in subclause (I) of 
     subsection (d)(2)(C)(i) and inserting ``section 36(g)(2)'',
       (B) by striking ``section 25A'' in subclause (II) of 
     subsection (d)(2)(C)(i) and inserting ``section 36'', and
       (C) by striking ``section 25A(g)(2)'' in clause (iii) of 
     subsection (d)(4)(B) and inserting ``section 36(g)(2)''.
       (10) Subsection (e) of section 6050S of such Code is 
     amended by striking ``section 25A'' and inserting ``section 
     36''.
       (11) Subparagraph (J) of section 6213(g)(2) of such Code is 
     amended by striking ``section 25A(g)(1)'' and inserting 
     ``section 36(g)(1)''.
       (12) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``or 
     from section 36 of such Code''.
       (13) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of the Internal Revenue Code of 
     1986 is amended by striking the item relating to section 36 
     and inserting the following:

``Sec. 36. Hope and Lifetime Learning credits.
``Sec. 37. Overpayments of tax.''.
       (14) The table of sections for subpart A of such part IV is 
     amended by striking the item relating to section 25A.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2006.
                                 ______