I

103D CONGRESS

1ST SESSION H. R. 82

To amend the Internal Revenue Code of 1986 to restore the deduction

for interest on certain educational loans.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. BUNNING (for himself, Mr. ARCHER, Mrs. JOHNSON of Connecticut, Mr.

RANGEL, Mr. SUNDQUIST, Mr. ACKERMAN, Mr. BACCHUS of Florida, Mr.

BAKER of Louisiana, Mr. BATEMAN, Mr. BEREUTER, Mr. BILIRAKIS, Mr.

BROWDER, Mr. CLINGER, Mr. CLYBURN, Mr. COSTELLO, Mr. COX, Ms.

DELAURO, Mr. DOOLITTLE, Mr. DURBIN, Mr. EMERSON, Mr. EWING,

Mr. GALLEGLY, Mr. GENE GREEN of Texas, Mr. HANSEN, Mr. HOLDEN,

Mrs. LOWEY of New York Mr. MCCRERY, Mr. MCDADE, Mr. MACHTLEY,

Mr. MARTINEZ, Mrs. MORELLA, Mr. MURPHY, Mr. OXLEY, Mr. PARKER,

Mr. PENNY, Mr. PICKETT, Mr. PORTER, Mr. QUILLEN, Mr.

ROHRABACHER, Mr. SANGMEISTER, Mr. SCHIFF, Mr. SENSENBRENNER,

Mr. SHAYS, Mr. SMITH of Oregon, Mr. SOLOMON, Mr. TRAFICANT, Mr.

WISE, Mr. WOLF, and Mr. WYNN) 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 deduction for interest on certain educational loans.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. RESTORATION OF DEDUCTION FOR INTEREST

2 ON EDUCATIONAL LOANS.

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

4 of the Internal Revenue Code of 1986 (defining personal

5 interest) is amended by striking ‘‘and’’ at the end of sub6 paragraph (D), by redesignating subparagraph (E) as sub7 paragraph (F), and by inserting after subparagraph (D)

8 the following new subparagraph:

9 ‘‘(E) any interest on a qualified edu10 cational loan (within the meaning of paragraph

11 (5)), and’’.

12 (b) QUALIFIED EDUCATIONAL LOAN DEFINED.—

13 Paragraph (5) of section 163(h) of such Code is amended

14 to read as follows:

15 ‘‘(5) QUALIFIED EDUCATIONAL LOAN.—For

16 purposes of this subsection—

17 ‘‘(A) IN GENERAL.—The term ‘qualified

18 educational loan’ means any indebtedness—

19 ‘‘(i) which is provided—

20 ‘‘(I) pursuant to a Federal,

21 State, or State-based guarantee pro22 gram or insurance program,

23 ‘‘(II) by an organization de24 scribed in section 501(c)(3) and ex25 empt from tax under section 501(a),

26 or
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1 ‘‘(III) by a financial institution

2 under a supplemental education pro3 gram which requires that repayments

4 on the loan be made to the edu5 cational institution referred to in sub6 paragraph (D)(i), and

7 ‘‘(ii) which is incurred to pay qualified

8 educational expenses which are paid or in9 curred within a reasonable period of time

10 before or after the indebtedness is in11 curred.

12 ‘‘(B) PHASEOUT OF BENEFIT.—

13 ‘‘(i) IN GENERAL.—The amount of in14 terest which would (but for this subpara15 graph) be taken into account under para16 graph (2)(E) for the taxable year shall be

17 reduced (but not below zero) by the

18 amount which bears the same ratio to such

19 interest as the excess of the taxpayer’s ad20 justed gross income for such taxable year

21 over the applicable dollar amount bears to

22 phaseout range.

23 ‘‘(ii) APPLICABLE DOLLAR AMOUNT;

24 PHASEOUT RANGE.—For purposes of

25 clause (i)—
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1 ‘‘(I) in the case of a return of an

2 unmarried individual, the applicable

3 dollar amount is $40,000 and the

4 phaseout range is $15,000,

5 ‘‘(II) in the case of a joint re6 turn, the applicable dollar amount is

7 $60,000 and the phaseout range is

8 $30,000, and

9 ‘‘(III) in any other case, the ap10 plicable dollar amount is zero.

11 ‘‘(C) DEDUCTION ALLOWABLE ONLY FOR

12 FIRST 48 MONTHS LOAN IS IN REPAYMENT STA13 TUS.—Paragraph (2)(E) shall apply only to in14 terest which is paid or incurred during the first

15 48 months (whether or not consecutive) for

16 which a payment is required to be made on the

17 loan.

18 ‘‘(D) QUALIFIED EDUCATIONAL EX19 PENSES.—For purposes of this paragraph—

20 ‘‘(i) IN GENERAL.—The term ‘quali21 fied educational expenses’ means qualified

22 tuition and related expenses of the tax23 payer, his spouse, or a dependent (as de24 fined in section 152) for attendance at an
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1 educational institution described in section

2 170(b)(1)(A)(ii).

3 ‘‘(ii) QUALIFIED TUITION AND RELAT4 ED EXPENSES.—The term ‘qualified tui5 tion and related expenses’ has the meaning

6 given such term by section 117(b), except

7 that such term shall include any reason8 able living expenses while away from home.

9 ‘‘(E) ADJUSTMENT OF PHASEOUT FOR IN10 FLATION.—

11 ‘‘(i) IN GENERAL.—In the case of any

12 taxable year beginning in a calendar year

13 after 1994, the $40,000 and $60,000

14 amounts contained in subparagraph (B)

15 shall be increased by an amount equal to—

16 ‘‘(I) such dollar amount, multi17 plied by

18 ‘‘(II) the cost-of-living adjust19 ment under section 1(f)(3) for the cal20 endar year in which the taxable year

21 begins, determined by substituting

22 ‘calendar year 1993’ for ‘calendar

23 year 1989’ in subparagraph (B) there24 of.
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1 ‘‘(ii) ROUNDING.—If any amount as

2 adjusted under clause (i) is not a multiple

3 of $50, such amount shall be rounded to

4 the nearest multiple of $50 (or, if such

5 amount is a multiple of $25, such amount

6 shall be rounded to the next highest mul7 tiple of $50).’’

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

9 this section shall apply to taxable years beginning after

10 December 31, 1993, but only with respect to loans the

11 first required payment on which is after such date.

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