I

103D CONGRESS

1ST SESSION H. R. 396

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 5, 1993

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. RESTORATION OF PRIOR LAW EXCLUSION FOR

4 SCHOLARSHIPS AND FELLOWSHIPS.

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

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

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

8 not been enacted.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years ending after the

3 date of the enactment of this Act.

4 SEC. 2. RESTORATION OF DEDUCTION FOR INTEREST ON

5 EDUCATIONAL LOANS.

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

7 of the Internal Revenue Code of 1986 (defining personal

8 interest) is amended by striking ‘‘and’’ at the end of sub9 paragraph (D), by redesignating subparagraph (E) as sub10 paragraph (F), and by inserting after subparagraph (D)

11 the following new subparagraph:

12 ‘‘(E) any interest on a qualified edu13 cational loan, and’’.

14 (b) QUALIFIED EDUCATIONAL LOAN DEFINED.—

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

16 by adding at the end the following new paragraph:

17 ‘‘(6) QUALIFIED EDUCATIONAL LOAN.—

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

19 subsection, the term ‘qualified educational loan’

20 means any indebtedness incurred to pay quali21 fied educational expenses which are paid or in22 curred within a reasonable period of time before

23 or after the indebtedness is incurred.

24 ‘‘(B) QUALIFIED EDUCATIONAL EX25 PENSES.—For purposes of this paragraph—
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1 ‘‘(i) IN GENERAL.—The term ‘quali2 fied educational expenses’ means qualified

3 tuition and related expenses of the tax4 payer, his spouse, or a dependent for at5 tendance at an educational institution de6 scribed in section 170(b)(1)(A)(ii).

7 ‘‘(ii) QUALIFIED TUITION AND RE8 LATED EXPENSES.—The term ‘qualified

9 tuition and related expenses’ means—

10 ‘‘(I) tuition and fees required for

11 enrollment or attendance at an edu12 cational institution described in sec13 tion 170(b)(1)(A)(ii),

14 ‘‘(II) fees, books, supplies, and

15 equipment required for courses of in16 struction at such an institution, and

17 ‘‘(III) reasonable living expenses

18 while away from home.

19 ‘‘(C) DEPENDENT.—For purposes of this

20 paragraph, the term ‘dependent’ has the mean21 ing given such term by section 152.

22 ‘‘(D) COORDINATION WITH PARAGRAPH

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

24 not be taken into account for purposes of apply25 ing the limitation of paragraph (3)(C)(ii).’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years ending after the

3 date of the enactment of this Act.

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