To amend the Internal Revenue Code of 1986 to exclude from gross income amounts paid on behalf of Federal employees and members of the Armed Forces on active duty under Federal student loan repayment programs.

June 16, 2005

Mr. VOINOVICH (for himself, Mr. AKAKA, Ms. COLLINS, Mr. DURBIN, and Mr. STEVENS) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to exclude from gross income amounts paid on behalf of Federal employees and members of the Armed Forces on active duty under Federal student loan repayment programs.

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 `Generating Opportunity by Forgiving Educational Debt for Service Act of 2005'.

SEC. 2. EXCLUSION FOR STUDENT LOAN REPAYMENTS BY THE FEDERAL GOVERNMENT.

(a) Exclusion From Gross Income- Section 108(f) of the Internal Revenue Code of 1986 (relating to student loans) is amended by adding at the end the following:

`(5) STUDENT LOAN REPAYMENTS BY FEDERAL GOVERNMENT- In the case of an individual, gross income does not include any payments made by the Federal Government on behalf of such individual under--

`(A)(i) section 5379 of title 5, United States Code; or

`(ii) any other similar Federal program for its employees; or

`(B) section 510(e)(2), chapter 109, or chapter 1609 of title 10, United States Code.'.

(b) Exclusion From Wages-

(1) IN GENERAL- Section 3121(a) of such Code (defining wages) is amended--

(A) in paragraph (21), by striking `or' at the end;

(B) in paragraph (22), by striking the period at the end and inserting `; or'; and

(C) by inserting after paragraph (22) the following:

`(23) any payment excluded from gross income under section 108(f)(5) (relating to student loan repayments by the Federal Government).'.

(2) SOCIAL SECURITY ACT- Section 209(a) of the Social Security Act (42 U.S.C. 409(a)) is amended by adding at the end the following:

`(20) Any payment excluded from gross income under section 108(f)(5) of the Internal Revenue Code of 1986 (relating to student loan repayments by Federal Government).'.

(c) Effective Date- The amendments made by this section shall apply to payments made on or after the date of enactment of this Act in taxable years ending after such date.

END