SECTION 1. SHORT TITLE.

    This Act may be cited as the ``College Access and Affordability 
Act''.

SEC. 2. EXPANSION OF HOPE AND LIFETIME LEARNING CREDITS.

    (a) Increase in Per Student Limitation for Hope Scholarship 
Credit.--
            (1) In general.--Subparagraph (B) of section 25A(b)(1) of 
        the Internal Revenue Code of 1986 is amended by striking ``the 
        applicable limit'' and inserting ``$4,000''.
            (2) Inflation adjustment.--Paragraph (1) of section 25A(h) 
        of such Code is amended by redesignating subparagraph (B) as 
        subparagraph (C) and by inserting after subparagraph (A) the 
        following new subparagraph:
                    ``(B) $4,000 amount.--In the case of a taxable year 
                beginning after 2005, the $4,000 amount contained in 
                subsection (b)(1)(B) 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 2004' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.''.
            (3) Conforming amendment.--Subsection (b) of section 25A of 
        such Code is amended by striking paragraph (4).
    (b) Increase in Gross Income Limitation .--
            (1) In general.--Clause (ii) of section 25A(d)(2)(A) of 
        such Code is amended by striking ``$40,000 ($80,000'' and 
        inserting ``$58,000 (twice such amount''.
            (2) Inflation adjustment.--Subparagraph (A) of section 
        25A(h)(2) of such Code is amended to read as follows:
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2005, the $58,000 amount in subsection 
                (d)(2) 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 2004' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.''.
    (c) Hope Scholarship Credit Available for 4 Years.--Paragraph (2) 
of section 25A(b) of such Code is amended by striking ``2'' each place 
it appears in subparagraphs (A) and (C) and inserting ``4''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 3. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    Section 428K (20 U.S.C. 1078-11) is amended to read as follows:

``SEC. 428K. LOAN FORGIVENESS FOR PUBLIC SERVICE EMPLOYEES.

    ``(a) Purposes.--The purposes of this section are--
            ``(1) to reduce the burden of student debt, particularly 
        for Americans who dedicate their careers to meeting certain 
        urgent national needs; and
            ``(2) to attract more excellent individuals into important 
        public service careers.
    ``(b) Loan Forgiveness.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay, pursuant to subsection (c), a loan made 
        under section 428 or 428H, a Federal Direct Stafford Loan or 
        Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Consolidation Loan, or a Federal Perkins Loan for any new 
        borrower after the date of enactment of the Higher Education 
        Amendments of 1998, who--
                    ``(A) is employed full time in a qualified public 
                service position described in paragraph (2); and
                    ``(B) is not in default on a loan for which the 
                borrower seeks forgiveness.
            ``(2) Qualified public service positions.--For purposes of 
        this section, an individual shall be treated as employed in a 
        qualified public service position if the individual is any of 
        the following:
                    ``(A) Highly qualified teachers of mathematics, 
                science, and bilingual and special education and in 
                low-income communities.--An individual who--
                            ``(i) is highly qualified as such term is 
                        defined in section 9101 of the Elementary and 
                        Secondary Education Act of 1965; and
                            ``(ii)(I) has obtained employment as a 
                        teacher for service in a public or nonprofit 
                        private elementary or secondary school which is 
                        in the school district of a local educational 
                        agency which is eligible in such year for 
                        assistance pursuant to title I of the 
                        Elementary and Secondary Education Act of 1965, 
                        and which for the purpose of this paragraph and 
                        for that year has been determined by the 
                        Secretary (pursuant to regulations and after 
                        consultation with the State educational agency 
                        of the State in which the school is located) to 
                        be a school in which the enrollment of children 
                        counted under section 1113(a)(5) of the 
                        Elementary and Secondary Education Act of 1965 
                        exceeds 40 percent of the total enrollment of 
                        that school; or
                            ``(II) has obtained employment as a full-
                        time teacher of mathematics, science, or 
                        bilingual or special education.
                    ``(B) First responders in low-income communities.--
                An individual who, as determined by the Secretary of 
                Education by regulation--
                            ``(i) has obtained employment as a 
                        firefighter, police officer, or emergency 
                        medical technician; and
                            ``(ii) serves a low-income community.
                    ``(C) Nurses in low income communities.--An 
                individual who is an eligible nurse and has obtained 
                employment--
                            ``(i)(I) in a clinical setting; or
                            ``(II) as a member of the nursing faculty 
                        at an accredited school of nursing (as those 
                        terms are defined in section 801 of the Public 
                        Health Service Act (42 U.S.C. 296)); and
                            ``(ii) serves a low-income or needy 
                        community.
                    ``(D) Child welfare workers.--An individual who--
                            ``(i) has completed a degree in social work 
                        or related field with a focus on serving 
                        children and families (as determined in 
                        accordance with regulations prescribed by the 
                        Secretary); and
                            ``(ii) has obtained employment in public or 
                        private child welfare services.
    ``(c) Loan Repayment.--
            ``(1) In general.--The Secretary shall assume the 
        obligation to repay a total of not more than $20,000 of 
        principal and interest as follows:
                    ``(A) after each of the first or second years of 
                service by an individual in a qualified public service 
                position, 15 percent of the total amount of principal 
                and interest of the loans described in subsection 
                (b)(1) to such individual that are outstanding 
                immediately preceding such first year of such service;
                    ``(B) after each of the third or fourth years of 
                such service, 20 percent of such total amount; and
                    ``(C) after the fifth year of such service, 30 
                percent of such total amount.
            ``(2) Treatment of consolidation loans.--A loan amount for 
        a loan made under section 428C or for a Federal Direct 
        Consolidation Loan may be a qualified loan amount for the 
        purposes of this subsection only to the extent that such loan 
        amount was used to repay a loan described in subsection (b)(1) 
        for a borrower who meets the requirements of subsection (b), as 
        determined in accordance with regulations prescribed by the 
        Secretary.
            ``(3) Construction.--Nothing in this section shall be 
        construed to authorize the refunding of any repayment of a loan 
        made under section 428 or 428H, a Federal Direct Stafford Loan 
        or Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Loan, or a Federal Perkins Loan.
            ``(4) 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 that accrues for such year 
        shall be repaid by the Secretary.
            ``(5) Ineligibility of national service award recipients.--
        No student 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.).
            ``(6) Ineligibility for double benefits.--No borrower may 
        receive a reduction of loan obligations under both this section 
        and section 428J or 460.
            ``(7) Continued eligibility of teachers.--Any teacher who 
        performs service in a school that--
                    ``(A) meets the requirements of subsection 
                (b)(2)(A)(ii)(I) in any year during such service; and
                    ``(B) in a subsequent year fails to meet the 
                requirements of such subsection, may continue to teach 
                in such school and shall be eligible for loan 
                forgiveness pursuant to subsection (b).
    ``(d) Repayment to Eligible Lenders and Holders.--The Secretary 
shall pay to each eligible lender or holder for each fiscal year an 
amount equal to the aggregate amount of the lender's or holder's loans 
that 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 each of the 
        consecutive years of qualifying service described in subsection 
        (c)(1). The borrower may elect to receive forbearance while 
        engaged in qualifying service described in subsection (c)(1) 
        unless the borrower is in deferment while so engaged.
    ``(f) Regulations.--The Secretary is authorized to prescribe such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(g) Definitions.--In this section:
            ``(1) Child welfare services.--The term `child welfare 
        services' has the meaning given the term in section 425 of the 
        Social Security Act.
            ``(2) Degree.--The term `degree' means an associate's or 
        bachelor's degree awarded by an institution of higher 
        education.
            ``(3) Eligible nurse.--The term `eligible nurse' means a 
        nurse who meets all of the following:
                    ``(A) The nurse graduated from--
                            ``(i) an accredited school of nursing (as 
                        those terms are defined in section 801 of the 
                        Public Health Service Act (42 U.S.C. 296));
                            ``(ii) a nursing center; or
                            ``(iii) an academic health center that 
                        provides nurse training.
                    ``(B) The nurse holds a valid and unrestricted 
                license to practice nursing in the State in which the 
                nurse practices in a clinical setting.
                    ``(C) The nurse holds 1 or more of the following:
                            ``(i) A graduate degree in nursing, or an 
                        equivalent degree.
                            ``(ii) A nursing degree from a collegiate 
                        school of nursing (as defined in section 801 of 
                        the Public Health Service Act (42 U.S.C. 296)).
                            ``(iii) A nursing degree from an associate 
                        degree school of nursing (as defined in section 
                        801 of the Public Health Service Act (42 U.S.C. 
                        296)).
                            ``(iv) A nursing degree from a diploma 
                        school of nursing (as defined in section 801 of 
                        the Public Health Service Act (42 U.S.C. 296)).
            ``(4) Low-income community.--In this subsection, the term 
        `low-income community' means a community in which 70 percent of 
        households earn less than 85 percent of the State median 
        household income.
            ``(5) Year.--The term `year', where applied to service as a 
        teacher (or service as a member of an accredited school of 
        nursing (as those terms are defined in section 801 of the 
        Public Health Service Act (42 U.S.C. 296))), means an academic 
        year as defined by the Secretary.''.
College Access and Affordability Act - Amends the Internal Revenue Code to: (1) increase to $4,000 the maximum amount of qualified tuition and related expenses eligible for the Hope Scholarship Credit and adjust such amount for inflation beginning in 2006; (2) increase to $58,000 the modified adjusted gross income threshold for determining reductions in the allowable amount of the Hope Scholarship Credit; and (3) increase from two to four the number of years a Hope Scholarship Credit may be claimed.

Amends the Higher Education Act of 1965 to provide for student loan forgiveness up to $20,000 for individuals in qualified public service positions who are not in default of their loan obligations. Defines "qualified public service positions" to include: (1) highly qualified teachers of mathematics, science, and bilingual and special education in low-income communities; (2) firefighters, police officers, or emergency medical technicians serving low-income communities; (3) nurses serving low-income communities; and (4) public or private child welfare workers.
To amend the Internal Revenue Code of 1986 to expand and enhance the HOPE and Lifetime Learning Credits, and to amend the Higher Education Act of 1965 to provide loan forgiveness opportunities for public service employees.