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.

January 29, 2003

Mr. CAMP (for himself, Mr. MCGOVERN, Mr. FOLEY, Mr. MATSUI, Mr. RAMSTAD, Mr. NEAL of Massachusetts, Mr. ENGLISH, Mrs. JONES of Ohio, Mr. HOUGHTON, Mr. HINCHEY, Mr. ROGERS of Michigan, Mr. EVANS, Mr. PETRI, Mr. TIERNEY, Mr. HOEKSTRA, Mr. STUPAK, Mrs. MILLER of Michigan, Mr. FRANK of Massachusetts, Mr. MCINNIS, Mr. WAXMAN, and Mr. WELLER) introduced the following bill; which was referred to the Committee on Ways and Means

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.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. EXPANSION OF EDUCATIONAL EXPENSES ALLOWED AS PART OF HOPE SCHOLARSHIP CREDIT.

(a) QUALIFIED TUITION AND RELATED EXPENSES EXPANDED TO INCLUDE 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 include fees, books, supplies, and equipment required 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 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, 2002 (in tax years ending after such date), for education furnished in academic periods beginning after such date.

END