To amend the Internal Revenue Code of 1986 to designate educational empowerment zones in certain low-income areas and to give a tax incentive to attract teachers to work in such areas.

Summary: Educational Empowerment Act - Amends the Internal Revenue Code to allow for the creation of up to 30 tax-qualified educational empowerment zones in certain low-income areas. Allows a tax credit for contributions to such educational empowerment zones for hiring new teachers, increasing teacher salaries, and training teachers. Establishes a teacher loan forgiveness program for certain certified elementary, middle, or secondary school teachers (e.g., writing, mathematics, and science teachers) in educational empowerment zones.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Educational Empowerment Act''.

SEC. 2. DESIGNATION OF EDUCATIONAL EMPOWERMENT ZONES.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subchapter:

             ``Subchapter X--Educational Empowerment Zones

``Sec. 1400E. Designation of educational empowerment zones.

``SEC. 1400E. DESIGNATION OF EDUCATIONAL EMPOWERMENT ZONES.

    ``(a) Designation.--
            ``(1) Educational Empowerment Zone.--For purposes of this 
        title, the term `educational empowerment zone' means any area--
                    ``(A) which is nominated by one or more local 
                governments and the State or States in which it is 
                located for designation as an educational empowerment 
                zone (hereinafter in this section referred to as a 
`nominated area'), and
                    ``(B) which the Secretary of Health and Human 
                Services and the Secretary of Education (hereinafter in 
                this section referred to as the `Secretaries 
                concerned') jointly designate as an educational 
                empowerment zone.
            ``(2) Number of designations.--The Secretaries concerned 
        may designate not more than 30 nominated areas as educational 
        empowerment zones.
            ``(3) Areas designated based on degree of poverty, etc.--
        Except as otherwise provided in this section, the nominated 
        areas designated as educational empowerment zones under this 
        subsection shall be those nominated areas with the highest 
        average ranking with respect to the criteria described in 
        subsection (c)(3). For purposes of the preceding sentence, an 
        area shall be ranked within each such criterion on the basis of 
        the amount by which the area exceeds such criterion, with the 
        area which exceeds such criterion by the greatest amount given 
        the highest ranking.
            ``(4) Limitation on designations.--
                    ``(A) Publication of regulations.--The Secretaries 
                concerned shall prescribe by regulation no later than 4 
                months after the date of the enactment of this 
                section--
                            ``(i) the procedures for nominating an area 
                        under paragraph (1)(A);
                            ``(ii) the parameters relating to the size 
                        and population characteristics of an 
                        educational empowerment zone; and
                            ``(iii) the manner in which nominated areas 
                        will be evaluated based on the criteria 
                        specified in subsection (c).
                    ``(B) Time limitations.--The Secretaries concerned 
                may designate nominated areas as educational 
                empowerment zones only during the 24-month period 
                beginning on the first day of the first month following 
                the month in which the regulations described in 
                subparagraph (A) are prescribed.
                    ``(C) Procedural rules.--The Secretaries concerned 
                shall not make any designation of a nominated area as 
                an educational empowerment zone under paragraph (2) 
                unless--
                            ``(i) a nomination regarding such area is 
                        submitted in such a manner and in such form, 
                        and contains such information, as the 
                        Secretaries concerned shall by regulation 
                        prescribe, and
                            ``(ii) the Secretaries concerned determine 
                        that any information furnished is reasonably 
                        accurate.
            ``(5) Nomination process for indian reservations.--For 
        purposes of this subchapter, in the case of a nominated area on 
        an Indian reservation, the reservation governing body (as 
        determined by the Secretary of the Interior) shall be treated 
        as being both the State and local governments with respect to 
        such area.
    ``(b) Period for Which Designation Is in Effect.--Any designation 
of an area as an educational empowerment zone shall remain in effect 
during the period beginning on the date of the designation and ending 
on the earliest of--
            ``(1) December 31, 2008,
            ``(2) the termination date designated by the State and 
        local governments in their nomination, or
            ``(3) the date the Secretaries concerned revoke such 
        designation.
    ``(c) Area and Eligibility Requirements.--
            ``(1) In general.--The Secretary of Commerce may designate 
        a nominated area as an educational empowerment zone under 
        subsection (a) only if the area meets the requirements of 
        paragraphs (2) and (3) of this subsection.
            ``(2) Area requirements.--For purposes of paragraph (1), a 
        nominated area meets the requirements of this paragraph if--
                    ``(A) the area is within the jurisdiction of one or 
                more local governments,
                    ``(B) the boundary of the area is continuous, and
                    ``(C) the area does not include an empowerment zone 
                (as defined in section 1393(b)) other than such a zone 
                designated under section 1391(g).
            ``(3) Eligibility requirements.--For purposes of paragraph 
        (1), a nominated are meets the requirements of this paragraph 
        if the State and the local governments in which it is located 
        certify that the nominated area satisfies such conditions as 
        the Secretary of Education deems appropriate.
            ``(4) Consideration of dropout rate, etc.--The Secretary of 
        Education, in setting forth the conditions for eligibility 
        pursuant to paragraph (3), shall take into account the extent 
        to which an area has low-income families, a high dropout rate, 
        a high rate of teen pregnancy, and large school class size.
    ``(d) Coordination With Treatment of Enterprise Communities.--For 
purposes of this title, if there are in effect with respect to the same 
area both--
            ``(1) a designation as an educational empowerment zone, and
            ``(2) a designation as an enterprise community,
both of such designations shall be given full effect with respect to 
such area.
    ``(e) Definitions and Special Rules.--For purposes of this 
subchapter, rules similar to the rules of paragraphs (2), (3), (5), and 
(7) of section 1393 shall apply.''.
    (b) Clerical Amendment.--The table of subchapters for chapter 1 is 
amended by adding at the end the following new item:

                              ``Subchapter X. Educational Empowerment 
                                        Zones.''.

SEC. 3. CREDIT FOR DONATIONS TO SCHOOL DISTRICTS IN EDUCATIONAL 
              EMPOWERMENT ZONES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 30A the following new section:

``SEC. 30B. CONTRIBUTIONS TO SCHOOL DISTRICTS IN EDUCATIONAL 
              EMPOWERMENT ZONES.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to the amount of qualified educational empowerment zone 
contributions made by the taxpayer during such year.
    ``(b) Maximum Credit.--The amount of the credit allowed by 
subsection (a)--
            ``(1) in the case of an individual, shall not exceed 
        $2,000, and
            ``(2) in the case of any other taxpayer, shall not exceed 
        $10,000.
    ``(c) Definition of Qualified Educational Empowerment Zone 
Contributions.--For purposes of this section, the term `qualified 
educational empowerment zone contributions' means cash contributions 
made to any school district located in an educational empowerment zone 
(as designated under section 1400E) if such contributions--
            ``(1) but for subsection (d), would be allowable as a 
        deduction under section 170, and
            ``(2) are used for any of the following purposes by the 
        school district:
                    ``(A) Hiring new teachers.
                    ``(B) Increasing teacher salaries.
                    ``(C) Training teachers.
    ``(d) Denial of Double Benefit.--No deduction shall be allowed 
under this chapter for any contribution taken into account in computing 
the credit under this section.
    ``(e) Election.--This section shall apply to any taxpayer for any 
taxable year only if such taxpayer elects (at such time and in such 
manner as the Secretary may by regulations prescribe) to have this 
section apply for such taxable year.
    ``(f) Application With Other Credits; Carryover of Excess Credit.--
The credit allowed by subsection (a) for any taxable year shall not 
exceed the excess (if any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and the preceding 
        sections of this subpart, over
            ``(2) the tentative minimum tax for the taxable year.
If the credit under subsection (a) exceeds the limitation of the 
preceding sentence, such excess shall be added to the credit allowable 
under subsection (a) for the succeeding taxable year.''.
    (b) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 30A the following new 
item:

``Sec. 30B. Contributions to school districts in educational 
                            empowerment zones.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 4. TEACHER LOAN FORGIVENESS PROGRAM.

    Part B of title IV of the Higher Education Act of 1965 is amended 
by inserting after section 428K (20 U.S.C. 1078-11) the following new 
section:

``SEC. 428L. LOAN FORGIVENESS FOR MATHEMATICS AND SCIENCE TEACHERS.

    ``(a) Purpose.--It is the purpose of this section to encourage more 
individuals to enter and stay in the field of teaching mathematics, 
science, and related fields.
    ``(b) Program.--
            ``(1) In general.--The Secretary shall carry out a program 
        of assuming the obligation to repay, pursuant to subsection 
        (c), a loan made, insured, or guaranteed under this part or 
        part D (excluding loans made under sections 428B and 428C or 
        comparable loans made under Part D) for any new borrower after 
        October 12, 1998, who--
                    ``(A) has been employed as a full-time teacher for 
                3 consecutive complete school years in a school that is 
                located in an educational empowerment zone, as such 
                term is defined in section 1400E of the Internal 
                Revenue Code of 1986;
                    ``(B) is a fully qualified teacher; and
                    ``(C) is not in default on a loan for which the 
                borrower seeks forgiveness.
            ``(2) Award basis; priority.--
                    ``(A) Award basis.--Subject to subparagraph (B), 
                loan repayment under this section shall be on a first-
                come, first-served basis and subject to the 
                availability of appropriations.
                    ``(B) Priority.--The Secretary shall give priority 
                in providing loan repayment under this section for a 
                fiscal year to student borrowers who received loan 
                repayment under this section for the preceding fiscal 
                year.
            ``(3) Regulations.--The Secretary is authorized to 
        prescribe such regulations as may be necessary to carry out the 
        provisions of this section.
    ``(c) Loan Repayment.--
            ``(1) Eligible amount.--The amount the Secretary may repay 
        on behalf of any individual under this section shall not 
        exceed--
                    ``(A) 80 percent of the sum of the principal 
                amounts outstanding of the individual's qualifying 
                loans at the end of 3 consecutive complete school years 
                of service described in subsection (b)(1)(A);
                    ``(B) an additional 10 percent of such sum at the 
                end of each of the next 2 consecutive complete school 
                years of such service; and
                    ``(C) a total of more than $10,000.
            ``(2) Construction.--Nothing in this section shall be 
        construed to authorize the refunding of any repaying of a loan 
        made under this part or part D.
            ``(3) Interest.--If a portion of a loan is repaid by the 
        Secretary under this section for any year, the proportionate 
        amount of interest on such loan which accrues for such year 
        shall be repaid by the Secretary.
            ``(4) Double benefits prohibited.--No borrower may, for the 
        same service, receive a benefit under both this section and 
        subtitle D of title I of the National and Community Service Act 
        of 1990 (42 U.S.C. 12601 et seq.). No borrower may receive a 
        reduction of loan obligations under both this section and 
        section 428J or 460.
    ``(d) Repayment to Eligible Lenders.--The Secretary shall pay to 
each eligible lender or holder for each fiscal year an amount equal to 
the aggregate amount of loans which are subject to repayment pursuant 
to this section for such year.
    ``(e) Application for Repayment.--
            ``(1) In general.--Each eligible individual desiring loan 
        repayment under this section shall submit a complete and 
        accurate application to the Secretary at such time, in such 
        manner, and containing such information as the Secretary may 
        require.
            ``(2) Conditions.--An eligible individual may apply for 
        loan repayment under this section after completing the required 
        number of years of qualifying employment.
            ``(3) Fully qualified teachers.--An application for loan 
        repayment under this section shall include such information as 
        is necessary to demonstrate that the applicant--
                    ``(A) if teaching in a public elementary or 
                secondary school (other than as a teacher in a public 
                charter school), has obtained State certification as a 
                teacher (including certification obtained through 
                alternative routes to certification) or passed the 
                State teacher licensing exam and holds a license to 
                teach in such State; and
                    ``(B) if teaching in--
                            ``(i) an elementary school, holds a 
                        bachelor's degree and demonstrates knowledge 
                        and teaching skills in reading, writing, 
                        mathematics, science, and other areas of the 
                        elementary school curriculum; or
                            ``(ii) a middle or secondary school, holds 
                        a bachelor's degree and demonstrates a high 
                        level of competency in all subject areas in 
                        which he or she teaches through--
                                    ``(I) a high level of performance 
                                on a rigorous State or local academic 
                                subject areas test; or
                                    ``(II) completion of an academic 
                                major in each of the subject areas in 
                                which he or she provides instruction.
    ``(f) Evaluation.--
            ``(1) In general.--The Secretary shall conduct, by grant or 
        contract, an independent national evaluation of the impact of 
        the program assisted under this section.
            ``(2) Competitive basis.--The grant or contract described 
        in subsection (b) shall be awarded on a competitive basis.
            ``(3) Contents.--The evaluation described in this 
        subsection shall--
                    ``(A) determine the number of individuals who were 
                encouraged by the program assisted under this section 
                to pursue teaching careers;
                    ``(B) determine the number of individuals who 
                remain employed in teaching mathematics, science, or 
                related fields as a result of participation in the 
                program;
                    ``(C) identify the barriers to the effectiveness of 
                the program;
                    ``(D) assess the cost-effectiveness of the program; 
                and
                    ``(E) identify the number of years each individual 
                participates in the program.
            ``(4) Interim and final evaluation reports.--The Secretary 
        shall prepare and submit to the President and the Congress such 
        interim reports regarding the evaluation described in this 
        subsection as the Secretary deems appropriate, and shall 
        prepare and so submit a final report regarding the evaluation 
        by January 1, 2008.''.