SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Forgiveness Act of 
2000''.

             TITLE I--STUDENT LOAN FORGIVENESS FOR TEACHERS

SEC. 101. REVISION OF LOAN FORGIVENESS FOR TEACHERS PROGRAM.

    (a) In General.--Section 428J of the Higher Education Act of 1965 
(20 U.S.C. 1078-10) is amended to read as follows:

``SEC. 428J. LOAN FORGIVENESS FOR TEACHERS.

    ``(a) Statement of Purpose.--It is the purpose of this section to 
encourage individuals to enter and continue in the teaching profession.
    ``(b) Program Authorized.--The Secretary shall carry out a program, 
through the holder of the loan, of assuming the obligation to repay a 
qualified loan amount for a loan made under section 428 or 428H, in 
accordance with subsection (c), for any borrower who--
            ``(1) is employed as a full-time teacher in a public 
        elementary or secondary school; and
            ``(2) is not in default on a loan for which the borrower 
        seeks forgiveness.
    ``(c) Qualified Loans Amount.--
            ``(1) In general.--The Secretary shall repay, for each year 
        of 4 years of service described in subsection (b)(1), not more 
        than one-fourth of the aggregate of the loan obligation on a 
        loan made under section 428 or 428H that is outstanding at the 
        beginning of the first year of such service, so that at the end 
        of such 4 years the the entire loan obligation is repaid. No 
        borrower may receive a reduction of loan obligations under both 
        this section and section 460.
            ``(2) Treatment of consolidation loans.--A loan amount for 
        a loan made under section 428C 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 Federal Direct Stafford 
        Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan 
        made under section 428 or 428H for a borrower who meets the 
        requirements of subsection (b), as determined in accordance 
        with regulations prescribed by the Secretary.
    ``(d) Regulations.--The Secretary is authorized to issue such 
regulations as may be necessary to carry out the provisions of this 
section.
    ``(e) Construction.--Nothing in this section shall be construed to 
authorize any refunding of any repayment of a loan.
    ``(f) Prevention of Double Benefits.--No borrower may, for the same 
service, receive a benefit under both this subsection and subtitle D of 
title I of the National and Community Service Act of 1990 (42 U.S.C. 
12571 et seq.).
    ``(g) Definition.--For purposes of this section, the term `year', 
where applied to service as a teacher, means an academic year as 
defined by the Secretary.''.
    (b) No Income Tax by Reason of Loan Forgiveness.--Subsection (f) of 
section 108 of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph:
            ``(4) Loan forgiveness for teachers.--In the case of an 
        individual, gross income does not include any amount which (but 
        for this paragraph) would be includible in gross income by 
        reason of the discharge (in whole or in part) of any loan if 
        such discharge was pursuant to section 428J of the Higher 
        Education Act of 1965 (20 U.S.C. 1078-10), as in effect on the 
        date of the enactment of this paragraph.''
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply with respect to years of service described in section 428J(b)(1) 
of the Higher Education Act of 1965 (as amended by such subsection) 
that begin on or after July 1, 1998.

                   TITLE II--TAX CREDITS FOR TEACHING

SEC. 201. $1,000 CREDIT FOR FULL-TIME PUBLIC ELEMENTARY AND SECONDARY 
              SCHOOL TEACHERS.

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

``SEC. 25B. CREDIT FOR FULL-TIME PUBLIC ELEMENTARY AND SECONDARY SCHOOL 
              TEACHERS.

    ``(a) In General.--In the case of an eligible individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year the amount of $1,000.
    ``(b) Eligible Individual.--For purposes of subsection (a), the 
term `eligible individual' means any individual who, for the academic 
year ending in the taxable year, was a full-time teacher at a public 
elementary or secondary school.
    ``(c) Reduction of Credit Where Loan Forgiven by Reason of 
Teaching.--The $1,000 amount in subsection (a) shall be reduced (but 
not below zero) by the amount of any loan for the education of the 
individual which is forgiven or canceled during the taxable year by 
reason of being such a teacher.''
    (b) Clerical Amendment.--The table of sections for such subpart A 
is amended by inserting after the item relating to section 25A the 
following new item:

                              ``Sec. 25B. Credit for full-time public 
                                        elementary and secondary school 
                                        teachers.''
    (c) Effective Date.--The amendments made by this section apply to 
taxable years beginning after the date of the enactment of this Act.
Amends the Internal Revenue Code (IRC) to provide that such student loan forgiveness shall not be included in an individual's gross income for income tax purposes.
Title II: Tax Credits for Teaching
 - Amends IRC to provide a tax credit of $1,000 for public elementary and secondary school teachers. Reduces the amount of such credit in cases of student loan forgiveness for teachers.
Student Loan Forgiveness Act of 2000