To amend the Internal Revenue Code of 1986 to expand the Hope Scholarship Credit to allow a credit without limitation for 50 percent of higher education expenses.

July 22, 2004

Mr. ACKERMAN introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to expand the Hope Scholarship Credit to allow a credit without limitation for 50 percent of higher education expenses.

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 `Affordable College Tuition Act of 2004'.

SEC. 2. EXPANSION OF HOPE SCHOLARSHIP CREDIT TO 50 PERCENT OF QUALIFIED TUITION EXPENSES.

(a) In General- Subsection (b) of section 25A of the Internal Revenue Code of 1986 (relating to Hope scholarship credit) is amended to read as follows:

`(b) Hope Scholarship Credit-

`(1) PER STUDENT CREDIT- In the case of any eligible student for whom an election is in effect under this section for any taxable year, the Hope Scholarship Credit is an amount equal to 50 percent of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year).

`(2) CREDIT ALLOWED FOR YEAR ONLY IF INDIVIDUAL IS AT LEAST 1/2 TIME STUDENT FOR PORTION OF YEAR- The Hope Scholarship Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an individual unless such individual is an eligible student for at least one academic period which begins during such year.

`(3) ELIGIBLE STUDENT- For purposes of this subsection, the term `eligible student' means, with respect to any academic period, a student who--

`(A) meets the requirements of section 484(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on the date of the enactment of this section, and

`(B) is carrying at least 1/2 the normal full-time work load for the course of study the student is pursuing.'.

(b) Adjusted Gross Income Limitation not to Apply to Hope Scholarship Credit- Paragraph (1) of section 25A(d) of such Code (relating to limitation based on modified adjusted gross income) is amended--

(1) in the text by striking `subsection (a)' and inserting `subsection (a)(2)', and

(2) in the heading by inserting `of Lifetime Learning Credit'.

(c) Conforming Amendment- Subsection (h) of such section (relating to inflation adjustments) is amended to read as follows:

`(h) Inflation Adjustments of Income Limits Applicable to Lifetime Learning Credit-

`(1) IN GENERAL- In the case of a taxable year beginning after 2001, the $40,000 and $80,000 amounts in subsection (d)(2) shall each be increased by an amount equal to--

`(A) such dollar amount, multiplied by

`(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2000' for `calendar year 1992' in subparagraph (B) thereof.

`(2) ROUNDING- If any amount as adjusted under paragraph (1) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000.'.

(d) Effective Date- The amendments made by this section shall apply to expenses paid after December 31, 2004 (in taxable years ending after such date), for education furnished in academic periods beginning after such date.

END