I 

108TH CONGRESS 

1ST SESSION H. R. 3412

To amend the Internal Revenue Code of 1986 to expand incentives for 

education. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 30, 2003

Mr. ENGLISH introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by 

the Speaker, in each case for consideration of such provisions as fall

within the jurisdiction of the committee concerned 

A BILL

To amend the Internal Revenue Code of 1986 to expand 

incentives for education.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Higher Education Af5 fordability and Equity Act of 2003’’. 

6 SEC. 2. EXPANSION OF DEDUCTION FOR INTEREST ON EDU7 CATION LOANS. 

8 (a) REPEAL OF DOLLAR LIMITATION; INCREASE IN

9 PHASEOUT BEGINNING POINT.—Subsection (b) of section 
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1 221 of the Internal Revenue Code of 1986 (relating to 

2 maximum deduction) is amended to read as follows: 

3 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

4 GROSS INCOME.—

5 ‘‘(1) IN GENERAL.—The amount which would 

6 (but for this subsection) be allowable as a deduction 

7 under this section shall be reduced (but not below 

8 zero) by the amount determined under paragraph 

9 (2). 

10 ‘‘(2) AMOUNT OF REDUCTION.—The amount 

11 determined under this paragraph is the amount 

12 which bears the same ratio to the amount which 

13 would be so taken into account as—

14 ‘‘(A) the excess of—

15 ‘‘(i) the taxpayer’s modified adjusted 

16 gross income for such taxable year, over 

17 ‘‘(ii) $100,000 ($200,000 in the case 

18 of a joint return), bears to 

19 ‘‘(B) $15,000 ($30,000 in the case of a 

20 joint return). 

21 ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—

22 The term ‘modified adjusted gross income’ means 

23 adjusted gross income determined—

24 ‘‘(A) without regard to this section and 

25 sections 222, 911, 931, and 933, and 
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1 ‘‘(B) after application of sections 86, 135, 

2 137, 219, and 469.’’. 

3 (b) CONFORMING AMENDMENT.—Section 221(f)(1) 

4 of such Code is amended to read as follows: 

5 ‘‘(1) IN GENERAL.—In the case of a taxable 

6 year beginning after 2004, the $100,000 and 

7 $200,000 amounts in subsection (b) shall each be in8 creased by an amount equal to—

9 ‘‘(A) such dollar amount, multiplied by 

10 ‘‘(B) the cost-of-living adjustment deter11 mined under section 1(f)(3) for the calendar 

12 year in which the taxable year begins, deter13 mined by substituting ‘calendar year 2003’ for 

14 ‘calendar year 1992’ in subparagraph (B) 

15 thereof.’’. 

16 (c) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2003.

19 SEC. 3. DEDUCTION FOR QUALIFIED TUITION AND RE20 LATED EXPENSES MADE PERMANENT. 

21 (a) REPEAL OF TERMINATION.—Section 222 of the 

22 Internal Revenue Code of 1986 is amended by striking 

23 subsection (e). 

24 (b) CONFORMING AMENDMENTS.—Subparagraph (B) 

25 of section 222(b)(2) of such Code is amended—
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1 (1) by striking ‘‘2004 or 2005’’ and inserting 

2 ‘‘2004 or thereafter’’, and 

3 (2) in the heading by striking ‘‘AND 2005’’ and 

4 inserting ‘‘AND THEREAFTER’’. 

5 (c) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to taxable years beginning after 

7 December 31, 2003. 

8 SEC. 4. EDUCATION SAVINGS ACCOUNTS. 

9 (a) INCREASE IN ALLOWABLE CONTRIBUTIONS.—

10 (1) IN GENERAL.—Clause (iii) of section 

11 530(b)(1)(A) of the Internal Revenue Code of 1986 

12 is amended by striking ‘‘$2,000’’ and inserting 

13 ‘‘$5,000’’. 

14 (2) CONFORMING AMENDMENT.—Section 

15 4973(e)(1)(A) of such Code is amended by striking 

16 ‘‘$2,000’’ and inserting ‘‘$5,000’’. 

17 (b) REPORTS.—Subsection (h) of section 530 of such 

18 Code is amended by striking the period at the end of the 

19 last sentence and inserting ‘‘, except that reports shall be 

20 so filed and furnished for any calendar year not later than 

21 June 30 of the following year.’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to taxable years beginning after 

24 December 31, 2003. 
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1 SEC. 5. ALLOWANCE OF ROOM, BOARD, AND SPECIAL 

2 NEEDS SERVICES IN THE CASE OF SCHOLAR3 SHIPS AND TUITION REDUCTION PROGRAMS 

4 WITH RESPECT TO HIGHER EDUCATION. 

5 (a) IN GENERAL.—Paragraph (1) of section 117(b) 

6 of the Internal Revenue Code of 1986 (defining qualified 

7 scholarship) is amended by inserting before the period at 

8 the end the following: ‘‘or, in the case of enrollment or 

9 attendance at an eligible educational institution, for quali10 fied higher education expenses.’’. 

11 (b) DEFINITIONS.—Subsection (b) of section 117 of 

12 such Code is amended by adding at the end the following 

13 new paragraph: 

14 ‘‘(3) QUALIFIED HIGHER EDUCATION EX15 PENSES; ELIGIBLE EDUCATIONAL INSTITUTION.—

16 The terms ‘qualified higher education expenses’ and 

17 ‘eligible educational institution’ have the meanings 

18 given such terms in section 529(e).’’. 

19 (c) TUITION REDUCTION PROGRAMS.—Paragraph 

20 (5) of section 117(d) of such Code (relating to special 

21 rules for teaching and research assistants) is amended by 

22 striking ‘‘shall be applied as if it did not contain the 

23 phrase ‘(below the graduate level)’.’’ and inserting ‘‘shall 

24 be applied—

25 ‘‘(A) as if it did not contain the phrase 

26 ‘(below the graduate level)’, and 
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1 ‘‘(B) by substituting ‘qualified higher edu2 cation expenses’ for ‘tuition’ the second place it 

3 appears.’’. 

4 (d) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to expenses paid after December 

6 31, 2003 (in taxable years ending after such date), for 

7 education furnished in academic periods beginning after 

8 such date.

9 SEC. 6. TREATMENT OF PREPAYMENT AND SAVINGS PLANS 

10 UNDER STUDENT FINANCIAL AID NEEDS 

11 ANALYSIS. 

12 (a) DEFINITION OF ASSETS.—Subsection (f) of sec13 tion 480 of the Higher Education Act of 1965 (20 U.S.C. 

14 1087vv(j)) is amended—

15 (1) in paragraph (1) by inserting ‘‘qualified 

16 education benefit (except as provided in paragraph 

17 (3)),’’ after ‘‘tax shelters,’’; and 

18 (2) by adding at the end the following new 

19 paragraphs: 

20 ‘‘(3) A qualified education benefit shall not be consid21 ered an asset of the student under section 475 of this part. 

22 ‘‘(4) For purposes of this subsection, the term ‘quali23 fied education benefit’ means—

24 ‘‘(A) a program which is described in clause (i) 

25 of section 529(b)(1)(A) of the Internal Revenue 
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1 Code of 1986 and which meets the requirements of 

2 section 529(b)(1)(B) of such Code; 

3 ‘‘(B) a State tuition program described in 

4 clause (ii) of section 529(b)(1)(A) of the Internal 

5 Revenue Code of 1986 which meets the requirements 

6 of section 529(b)(1)(B) of such Code; and 

7 ‘‘(C) a Coverdell education savings account (as 

8 defined in section 530(b)(1) of the Internal Revenue 

9 Code of 1986).’’. 

10 (b) DEFINITION OF OTHER FINANCIAL ASSIST11 ANCE.—Subsection (j) of section 480 of the Higher Edu12 cation Act of 1965 (20 U.S.C. 1087vv(j)) is amended—

13 (1) by striking ‘‘; TUITION PREPAYMENT

14 PLANS’’ in the heading of such subsection; 

15 (2) by striking ‘‘(1) For purposes’’ and insert16 ing ‘‘For purposes’’; and 

17 (3) by striking paragraph (2). 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply with respect to determinations of 

20 need under part F of title IV of the Higher Education 

21 Act of 1965 for academic years beginning on or after July 

22 1, 2005. 
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1 SEC. 7. REPEAL OF EGTRRA SUNSET APPLICABILITY TO 

2 CERTAIN EDUCATION PROVISIONS. 

3 Title IX of the Economic Growth and Tax Relief Rec4 onciliation Act of 2001 (relating to sunset of provisions 

5 of such Act) shall not apply to subtitles A, B, and D of 

6 title IV of such Act.

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