I

104TH CONGRESS

1ST SESSION H. R. 157

To amend the Internal Revenue Code of 1986 to restore the prior law

exclusion for scholarships and fellowships and to restore the deduction

for interest on educational loans.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 4, 1995

Mr. SOLOMON introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to restore

the prior law exclusion for scholarships and fellowships

and to restore the deduction for interest on educational

loans.

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 ‘‘Student Tax Equity

5 Act of 1995’’.
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1 SEC. 2. RESTORATION OF PRIOR LAW EXCLUSION FOR

2 SCHOLARSHIPS AND FELLOWSHIPS.

3 (a) IN GENERAL.—Each provision of law amended by

4 section 123 of the Tax Reform Act of 1986 is amended

5 to read as if the amendments made by such section had

6 not been enacted.

7 (b) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to taxable years ending after the

9 date of the enactment of this Act.

10 SEC. 3. RESTORATION OF DEDUCTION FOR INTEREST ON

11 EDUCATIONAL LOANS.

12 (a) IN GENERAL.—Paragraph (2) of section 163(h)

13 of the Internal Revenue Code of 1986 (defining personal

14 interest) is amended by striking ‘‘and’’ at the end of sub15 paragraph (D), by redesignating subparagraph (E) as sub16 paragraph (F), and by inserting after subparagraph (D)

17 the following new subparagraph:

18 ‘‘(E) any interest on a qualified edu19 cational loan, and’’.

20 (b) QUALIFIED EDUCATIONAL LOAN DEFINED.—

21 Subsection (h) of section 163 of such Code is amended

22 by adding at the end the following new paragraph:

23 ‘‘(6) QUALIFIED EDUCATIONAL LOAN.—

24 ‘‘(A) IN GENERAL.—For purposes of this

25 subsection, the term ‘qualified educational loan’

26 means any indebtedness incurred to pay quali-
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1 fied educational expenses which are paid or in2 curred within a reasonable period of time before

3 or after the indebtedness is incurred.

4 ‘‘(B) QUALIFIED EDUCATIONAL EX5 PENSES.—For purposes of this paragraph—

6 ‘‘(i) IN GENERAL.—The term ‘quali7 fied educational expenses’ means qualified

8 tuition and related expenses of the tax9 payer, his spouse, or a dependent for at10 tendance at an educational institution de11 scribed in section 170(b)(1)(A)(ii).

12 ‘‘(ii) QUALIFIED TUITION AND RELAT13 ED EXPENSES.—The term ‘qualified tui14 tion and related expenses’ means—

15 ‘‘(I) tuition and fees required for

16 enrollment or attendance at an edu17 cational institution described in sec18 tion 170(b)(1)(A)(ii),

19 ‘‘(II) fees, books, supplies, and

20 equipment required for courses of in21 struction at such an institution, and

22 ‘‘(III) reasonable living expenses

23 while away from home.
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1 ‘‘(C) DEPENDENT.—For purposes of this

2 paragraph, the term ‘dependent’ has the mean3 ing given such term by section 152.

4 ‘‘(D) COORDINATION WITH PARAGRAPH

5 (3)(C)(ii).—Any qualified educational loan shall

6 not be taken into account for purposes of apply7 ing the limitation of paragraph (3)(C)(ii).’’

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

9 this section shall apply to taxable years ending after the

10 date of the enactment of this Act.

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