To amend the Internal Revenue Code of 1986 to allow a credit against tax for qualified tuition and related expenses.

Summary: Universal College Credit Act - Amends the Internal Revenue Code to allow a tax credit up to $5,000 annually for the qualified tuition and related expenses of an individual taxpayer, a taxpayer's spouse, or dependents for instruction at an institution of higher education. Allows such credit for four years of undergraduate education expenses and six years of graduate or professional education expenses. Excludes expenses for courses involving sports, games, or hobbies (unless part of a degree program) and expenses unrelated to an academic program (e.g., student activity fees, athletic fees, or insurance expenses).

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Universal College Credit Act''.

SEC. 2. UNIVERSAL COLLEGE CREDIT.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 25D the following new section:

``SEC. 25E. UNIVERSAL COLLEGE CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual for whom 
an election is in effect under this section for a taxable year, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the qualified tuition and 
related expenses paid by the taxpayer during the taxable year.
    ``(b) Dollar Limitation.--The amount allowed as a credit under 
subsection (a) with respect to each individual for whom qualified 
tuition and related expenses are paid by the taxpayer during the 
taxable year shall not exceed $5,000.
    ``(c) Credit Allowed Only for 4 Years of Undergraduate Education 
and 6 Years of Graduate Education.--An election to have this section 
apply with respect to any individual for whom qualified tuition and 
related expenses are paid by the taxpayer during the taxable year may 
not be made for any taxable year if such an election (by the taxpayer 
or any other individual) is in effect with respect to--
            ``(1) the undergraduate education expenses of such 
        individual for any 4 prior taxable years, or
            ``(2) the graduate education expenses of such individual 
        for any 6 prior taxable years.
    ``(d) Denial of Double Benefit.--No credit shall be allowed under 
this section with respect to the qualified tuition and related expenses 
of any individual if a credit or deduction is allowed under any other 
provision of this chapter with respect to such expenses.
    ``(e) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified tuition and related expenses.--
                    ``(A) In general.--The term `qualified tuition and 
                related expenses' means tuition and fees required for 
                the enrollment or attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151,
                at an eligible educational institution for courses of 
                instruction of such individual at such institution.
                    ``(B) Exception for education involving sports, 
                etc.--Such term does not include expenses with respect 
                to any course or other education involving sports, 
                games, or hobbies, unless such course or other 
                education is part of the individual's degree program.
                    ``(C) Exception for nonacademic fees.--Such term 
                does not include student activity fees, athletic fees, 
                insurance expenses, or other expenses unrelated to an 
                individual's academic course of instruction.
                    ``(D) Adjustment for scholarships and section 529 
                distributions.--The amount of qualified tuition and 
                related expenses otherwise taken into account under 
                subsection (a) with respect to an individual for the 
                taxable year shall be reduced--
                            ``(i) as provided in section 25A(g)(2), and
                            ``(ii) by the amount of such expenses which 
                        are taken into account in determining the 
                        exclusions under sections 529(c)(3)(B) and 
                        530(d)(2).
            ``(2) Eligible educational institution.--The term `eligible 
        educational institution' means an institution--
                    ``(A) which is described in section 102 of the 
                Higher Education Act of 1965 (20 U.S.C. 1001, 1002), as 
                in effect on the date of the enactment of this section, 
                and
                    ``(B) which is eligible to participate in a program 
                under title IV of such Act.
            ``(3) Undergraduate education expenses.--The term 
        `undergraduate education expenses' means the qualified tuition 
        and related expenses paid by the taxpayer during a taxable year 
        for an individual enrolled in an undergraduate course of study 
        during such taxable year.
            ``(4) Graduate education expenses.--The term `graduate 
        education expenses' means the qualified tuition and related 
        expenses paid by the taxpayer during a taxable year for an 
        individual enrolled in a graduate or professional course of 
        study during such taxable year.
            ``(5) Adjustment for certain scholarships, etc.--The amount 
        of qualified tuition and related expenses otherwise taken into 
        account under subsection (a) with respect to an individual for 
        an academic period shall be reduced by the sum of any amounts 
        paid for the benefit of such individual which are allocable to 
        such period as--
                    ``(A) a qualified scholarship which is excludable 
                from gross income under section 117,
                    ``(B) an educational assistance allowance under 
                chapter 30, 31, 32, 34, or 35 of title 38, United 
                States Code, or under chapter 1606 of title 10, United 
                States Code, and
                    ``(C) a payment (other than a gift, bequest, 
                devise, or inheritance within the meaning of section 
                102(a)) for such individual's educational expenses, or 
                attributable to such individual's enrollment at an 
                eligible educational institution, which is excludable 
                from gross income under any law of the United States.
    ``(f) Election Not To Have Section Apply.--A taxpayer may elect to 
have this section not apply with respect to an individual for any 
taxable year.''.
    (b) Coordination With Exclusion for Income From United States 
Savings Bonds Used To Pay Higher Education Tuition and Fees.--
Subparagraph (A) of section 135(d)(2) of such Code is amended by 
inserting ``or 25E'' after ``section 25A''.
    (c) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 25D the following new 
item:

``Sec. 25E. Universal college credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after the date of the enactment of this 
Act.