107th CONGRESS
1st Session
S. 888
To amend the Internal Revenue Code of 1986 to provide assistance
to students and families coping with the costs of higher education, and for
other purposes.
IN THE SENATE OF THE UNITED STATES
May 15, 2001
Mr. LIEBERMAN introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide assistance
to students and families coping with the costs of higher education, and for
other purposes.
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 `College Tuition Assistance Act of 2001'.
SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES.
(a) DEDUCTION ALLOWED- Part VII of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 (relating to additional itemized deductions for individuals)
is amended by redesignating section 222 as section 223 and by inserting after
section 221 the following:
`SEC. 222. HIGHER EDUCATION EXPENSES.
`(a) ALLOWANCE OF DEDUCTION-
`(1) IN GENERAL- In the case of an individual, there shall be allowed as
a deduction an amount equal to the applicable dollar amount of the qualified
tuition and related expenses paid by the taxpayer during the taxable year.
`(2) APPLICABLE DOLLAR AMOUNT- The applicable dollar amount for any taxable
year shall be determined as follows:
Applicable
`Taxable year:
dollar amount:
2002
$5,000
2003 and thereafter
$10,000.
`(b) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME-
`(1) IN GENERAL- The amount which would (but for this subsection) be taken
into account under subsection (a) shall be reduced (but not below zero)
by the amount determined under paragraph (2).
`(2) AMOUNT OF REDUCTION- The amount determined under this paragraph equals
the amount which bears the same ratio to the amount which would be so taken
into account as--
`(i) the taxpayer's modified adjusted gross income for such taxable
year, over
`(ii) $50,000 ($100,000 in the case of a joint return), bears to
`(B) $10,000 ($20,000 in the case of a joint return).
`(3) MODIFIED ADJUSTED GROSS INCOME- For purposes of this subsection, the
term `modified adjusted gross income' means the adjusted gross income of
the taxpayer for the taxable year determined without regard to this section
and sections 911, 931, and 933.
`(4) ADJUSTMENTS FOR INFLATION-
`(A) IN GENERAL- In the case of a taxable year beginning after 2001, the
$50,000 and $100,000 amounts in paragraph (2)(A)(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, determined by
substituting `calendar year 2000' for `calendar year 1992' in subparagraph
(B) thereof.
`(B) ROUNDING- If any amount as adjusted under subparagraph (A) is not
a multiple of $1,000, such amount shall be rounded to the next lowest
multiple of $1,000.
`(c) QUALIFIED TUITION AND RELATED EXPENSES- For purposes of this section,
the term `qualified tuition and related expenses' has the meaning given such
term by section 25A(f)(1) (determined with regard to section 25A(c)(2)(B)).
`(1) IDENTIFICATION REQUIREMENT- No deduction shall be allowed under subsection
(a) to a taxpayer with respect to the qualified tuition and related expenses
of an individual unless the taxpayer includes the name and taxpayer identification
number of such individual on the return of tax for the taxable year.
`(A) IN GENERAL- No deduction shall be allowed under subsection (a) for
any expense for which a deduction is allowable to the taxpayer under any
other provision of this chapter unless the taxpayer irrevocably waives
his right to the deduction of such expense under such other provision.
`(B) DENIAL OF DEDUCTION TO THE EXTENT CREDIT IS ELECTED- No deduction
shall be allowed under subsection (a) for a taxable year with respect
to the qualified tuition and related expenses of an individual to the
extent the taxpayer elects to have section 25A apply with respect to such
expenses for such year.
`(C) DEPENDENTS- No deduction shall be allowed under subsection (a) to
any individual with respect to whom a deduction under section 151 is allowable
to another taxpayer for a taxable year beginning in the calendar year
in which such individual's taxable year begins.
`(D) COORDINATION WITH EXCLUSIONS- A deduction shall be allowed under
subsection (a) for qualified tuition and related expenses only to the
extent the amount of such expenses exceeds the amount excludable under
section 135 or 530(d)(2) for the taxable year.
`(3) LIMITATION ON TAXABLE YEAR OF DEDUCTION-
`(A) IN GENERAL- A deduction shall be allowed under subsection (a) for
qualified tuition and related expenses for any taxable year only to the
extent such expenses are in connection with enrollment at an institution
of higher education during the taxable year.
`(B) CERTAIN PREPAYMENTS ALLOWED- Subparagraph (A) shall not apply to
qualified tuition and related expenses paid during a taxable year if such
expenses are in connection with an academic term beginning during such
taxable year or during the first 3 months of the next taxable year.
`(4) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS AND VETERANS BENEFITS- The amount
of qualified tuition and related expenses otherwise taken into account under
subsection (a) with respect to the education of an individual shall be reduced
(before the application of subsection (b)) by the sum of the amounts received
with respect to such individual for the taxable year as--
`(A) a qualified scholarship which under section 117 is not includable
in gross income,
`(B) an educational assistance allowance under chapter 30, 31, 32, 34,
or 35 of title 38, United States Code, or
`(C) a payment (other than a gift, bequest, devise, or inheritance within
the meaning of section 102(a) or needs-based aid received under part A
of title IV of the Higher Education Act of 1965) for educational expenses,
or attributable to enrollment at an eligible educational institution,
which is exempt from income taxation by any law of the United States.
`(5) NO DEDUCTION FOR MARRIED INDIVIDUALS FILING SEPARATE RETURNS- If the
taxpayer is a married individual (within the meaning of section 7703), this
section shall apply only if the taxpayer and the taxpayer's spouse file
a joint return for the taxable year.
`(6) NONRESIDENT ALIENS- If the taxpayer is a nonresident alien individual
for any portion of the taxable year, this section shall apply only if such
individual is treated as a resident alien of the United States for purposes
of this chapter by reason of an election under subsection (g) or (h) of
section 6013.
`(7) REGULATIONS- The Secretary may prescribe such regulations as may be
necessary or appropriate to carry out this section, including regulations
requiring recordkeeping and information reporting.'.
(b) DEDUCTION ALLOWED IN COMPUTING ADJUSTED GROSS INCOME- Section 62(a) of
the Internal Revenue Code of 1986 is amended by inserting after paragraph
(17) the following:
`(18) HIGHER EDUCATION EXPENSES- The deduction allowed by section 222.'.
(c) CONFORMING AMENDMENT- The table of sections for part VII of subchapter
B of chapter 1 of the Internal Revenue Code of 1986 is amended by striking
the item relating to section 222 and inserting the following:
`Sec. 222. Higher education expenses.
`Sec. 223. Cross reference.'.
(d) EFFECTIVE DATE- The amendments made by this section shall apply to expenses
paid after December 31, 2001 (in taxable years ending after such date), for
education furnished in academic periods beginning after such date.
SEC. 3. EXPANSION OF LIFETIME LEARNING CREDIT.
(a) IN GENERAL- Section 25A(c)(1) of the Internal Revenue Code of 1986 (relating
to lifetime learning credit) is amended by striking `20 percent' and inserting
`28 percent'.
(b) INCREASE IN AGI LIMITS-
(1) IN GENERAL- Subsection (d) of section 25A of the Internal Revenue Code
of 1986 is amended to read as follows:
`(d) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME-
`(A) IN GENERAL- The amount which would (but for this subsection) be taken
into account under subsection (a)(1) 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 taxpayer's modified adjusted gross income for such taxable
year, over
`(II) $40,000 ($80,000 in the case of a joint return), bears to
`(ii) $10,000 ($20,000 in the case of a joint return).
`(2) LIFETIME LEARNING CREDIT-
`(A) IN GENERAL- The amount which would (but for this subsection) be taken
into account under subsection (a)(2) 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 taxpayer's modified adjusted gross income for such taxable
year, over
`(II) $50,000 ($100,000 in the case of a joint return), bears to
`(ii) $10,000 ($20,000 in the case of a joint return).
`(3) MODIFIED ADJUSTED GROSS INCOME- For purposes of this subsection, the
term `modified adjusted gross income' means the adjusted gross income of
the taxpayer for the taxable year increased by any amount excluded from
gross income under section 911, 931, or 933.'.
(2) CONFORMING AMENDMENT- Section 25A(h)(2)(A) of such Code is amended by
striking `subsection (d)(2)' and inserting `subsection (d)(1)(B) and the
$50,000 and $100,000 amounts in subsection (d)(2)(B)'.
(c) USE OF CERTAIN NEEDS-BASED AID FOR QUALIFIED EXPENSES- Section 25A(g)(2)(C)
of the Internal Revenue Code of 1986 (relating to adjustment for certain scholarships
, etc.) is amended by inserting `or needs-based aid received under part A
of title IV of the Higher Education Act of 1965' after `section 102(a)'.
(d) EFFECTIVE DATE- The amendments made by this section shall apply to expenses
paid after December 31, 2001 (in taxable years ending after such date), for
education furnished in academic periods beginning after such date.
SEC. 4. EXPANSION OF STUDENT LOAN INTEREST DEDUCTION.
(1) IN GENERAL- Section 221(b)(1) of the Internal Revenue Code of 1986 (relating
to maximum deduction) is amended by inserting `with respect to qualified
education loans of each eligible student' after `paragraph (2),'.
(2) EFFECTIVE DATE- The amendment made by this subsection shall apply with
respect to any loan interest paid after December 31, 2001, in taxable years
ending after such date.
(b) ELIMINATION OF 60-MONTH LIMIT-
(1) IN GENERAL- Section 221 of the Internal Revenue Code of 1986 (relating
to interest on education loans) is amended by striking subsection (d) and
by redesignating subsections (e), (f), and (g) as subsections (d), (e),
and (f), respectively.
(2) CONFORMING AMENDMENT- Section 6050S(e) of such Code is amended by striking
`section 221(e)(1)' and inserting `section 221(d)(1)'.
(3) EFFECTIVE DATE- The amendments made by this subsection shall apply with
respect to any loan interest paid after December 31, 2001, in taxable years
ending after such date.
(c) INCREASE IN INCOME LIMITATION-
(1) IN GENERAL- Section 221(b)(2)(B) of the Internal Revenue Code of 1986
(relating to amount of reduction) is amended by striking clauses (i) and
(ii) and inserting the following:
`(I) the taxpayer's modified adjusted gross income for such taxable
year, over
`(II) $40,000 ($80,000 in the case of a joint return), bears to
`(ii) $15,000 ($20,000 in the case of a joint return).'.
(2) CONFORMING AMENDMENT- Section 221(g)(1) of such Code is amended by striking
`$60,000' and inserting `$80,000'.
(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to
taxable years ending after December 31, 2001.
SEC. 5. PELL GRANTS.
Section 401(b)(2)(A) of the Higher Education Act of 1965 (20 U.S.C. 1070a(b)(2)(A))
is amended--
(1) in clause (iii), by striking `$5,100' and inserting `$5,800'; and
(2) in clause (iv), by striking `$5,400' and inserting `$5,800'.
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