II 

114TH CONGRESS 

1ST SESSION S. 2191 

To establish Federal-State higher education financing partnerships to drive 

down the cost of tuition for millions of American students. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 21, 2015 

Mr. WYDEN (for himself and Mr. MERKLEY) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To establish Federal-State higher education financing partnerships to drive down the cost of tuition for millions 

of American students. 

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 ‘‘Promoting Access and 

5 Retention Through New Efforts to Require Shared Higher 

6 Investments in Postsecondary Success Act’’ or the 

7 ‘‘PARTNERSHIPS Act’’. 


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1 TITLE I—STATE-FEDERAL COL2 LEGE AFFORDABILITY AND 

3 COMPLETION PARTNERSHIPS 

4 SEC. 101. STATE-FEDERAL COLLEGE AFFORDABILITY AND 

5 COMPLETION PARTNERSHIPS. 

6 Title IV of the Higher Education Act of 1965 (20 

7 U.S.C. 1070 et seq.) is amended by adding at the end 

8 the following: 

9 ‘‘PART J—STATE-FEDERAL COLLEGE AFFORD10 ABILITY AND COMPLETION PARTNERSHIPS 

11 ‘‘SEC. 499–1. PURPOSE. 

12 ‘‘The purpose of this part is to establish a State-Fed13 eral partnership that incentivizes State investment in pub14 lic higher education. 

15 ‘‘SEC. 499–2. DEFINITIONS. 

16 ‘‘In this part: 

17 ‘‘(1) ELIGIBLE STATE.—The term ‘eligible 

18 State’ means a State that provides, to public institu19 tions of higher education, net State operating sup20 port per FTE student in an amount equal to not 

21 less than 50 percent of the amount that reflects the 

22 maximum Federal Pell Grant award amount for the 

23 most recent academic year. 

24 ‘‘(2) FULL-TIME EQUIVALENT STUDENT NUM25 BER.—The term ‘full-time equivalent student numVerDate Sep 11 2014 00:40 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2191.IS S2191

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1 ber’ means a number reflecting the number of stu2 dents enrolled full-time at a public institution of 

3 higher education in the State, and shall be defined 

4 and calculated in the manner determined most ap5 propriate by the Secretary. 

6 ‘‘(3) LOW-INCOME STUDENT.—The term ‘low7 income student’ means a student who is eligible for 

8 a Federal Pell Grant under section 401. 

9 ‘‘(4) NET STATE OPERATING SUPPORT.—The 

10 term ‘net State operating support’ means an amount 

11 that is equal to the amount of State funds and local 

12 government appropriations used to support public 

13 higher education annual operating expenses in the 

14 State, calculated in accordance with subparagraphs 

15 (A) and (B). 

16 ‘‘(A) CALCULATION.—A State’s net State 

17 operating support shall, for a fiscal year, be an 

18 amount that is equal to the difference resulting 

19 from the gross amount of State funds appro20 priated and disbursed by the State and ex21 pended by the recipient institutions in the fiscal 

22 year for public higher education operating ex23 penses in the State, minus— 

24 ‘‘(i) such appropriations that are re25 turned to the State; 


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1 ‘‘(ii) State-appropriated funds derived 

2 from Federal sources, including funds pro3 vided under this part; 

4 ‘‘(iii) local government funds not ap5 propriated for operating support for public 

6 higher education; 

7 ‘‘(iv) amounts that are portions of 

8 multi-year appropriations to be distributed 

9 over multiple years that are not to be 

10 spent for the year for which the calculation 

11 is being made; 

12 ‘‘(v) tuition charges remitted to the 

13 State to offset State appropriations; 

14 ‘‘(vi) State funding for students in 

15 non-credit continuing or adult education 

16 courses and non-credit extension courses; 

17 ‘‘(vii) sums appropriated to private 

18 nonprofit institutions of higher education, 

19 or to proprietary institutions of higher 

20 education, for capital outlay or operating 

21 expenses; and 

22 ‘‘(viii) any other funds excluded under 

23 subparagraph (B). 

24 ‘‘(B) EXCLUSIONS.—Net State operating 

25 support does not include— 


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1 ‘‘(i) funds for— 

2 ‘‘(I) student aid programs that 

3 provide grants to students attending 

4 in-State private nonprofit institutions 

5 of higher education, in-State propri6 etary institutions of higher education, 

7 independent institutions, in-State pub8 lic institutions, and out-of-State insti9 tutions; 

10 ‘‘(II) capital outlay; 

11 ‘‘(III) deferred maintenance; or 

12 ‘‘(IV) research and development; 

13 or 

14 ‘‘(ii) any other funds that the Sec15 retary may exclude. 

16 ‘‘(5) NET STATE OPERATING SUPPORT PER FTE

17 STUDENT.—The term ‘net State operating support 

18 per FTE student’ means, for a fiscal year— 

19 ‘‘(A) the net State operating support for 

20 the previous fiscal year; divided by 

21 ‘‘(B) the full-time equivalent student num22 ber for the previous fiscal year. 

23 ‘‘(6) PUBLIC INSTITUTION.—The term ‘public 

24 institution’ means an institution of higher education 

25 (as defined in section 101) whose liabilities are 


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1 backed by the full faith and credit of the State or 

2 its equivalent, as determined in accordance with sec3 tion 668.15 of title 34, Code of Federal Regulations, 

4 or any successor regulation. 

5 ‘‘(7) PRIVATE NONPROFIT INSTITUTION OF

6 HIGHER EDUCATION.—The term ‘private nonprofit 

7 institution of higher education’ means an institution 

8 of higher education, as defined in section 102, that 

9 is a private nonprofit institution. 

10 ‘‘(8) PROPRIETARY INSTITUTION OF HIGHER

11 EDUCATION.—The term ‘proprietary institution of 

12 higher education’ has the meaning given the term in 

13 section 102(b). 

14 ‘‘SEC. 499–3. AUTHORIZATION; USE OF FUNDS. 

15 ‘‘(a) AUTHORIZATION.—The Secretary shall award 

16 annual block grants to eligible States to encourage States 

17 to provide additional funding for public higher education. 

18 ‘‘(b) USE OF FUNDS BY STATES.—An eligible State 

19 receiving a block grant under this part shall allocate 100 

20 percent of block grant funding to public institutions for 

21 public higher education expenditures in accordance with 

22 subsection (c). 

23 ‘‘(c) USE OF FUNDS BY PUBLIC INSTITUTIONS.—A 

24 public institution that receives funds under this part 

25 shall— 


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1 ‘‘(1) use a portion of such funds to directly re2 duce tuition costs or mitigate the need to raise tui3 tion and fees for students residing in the State; 

4 ‘‘(2) use a portion of such funds to support the 

5 enrollment of low-income students in the institution; 

6 ‘‘(3) use a portion of such funds to support re7 tention and degree completion of low-income stu8 dents; and 

9 ‘‘(4) create a publicly available report that doc10 uments the institution’s efforts to satisfy the re11 quirements described in paragraphs (1) through (3). 

12 ‘‘(d) PROHIBITIONS.— 

13 ‘‘(1) NO USE FOR ENDOWMENTS.—A public in14 stitution may not use funds received under this part 

15 to increase the endowment of the public institution. 

16 ‘‘(2) NO USE FOR ATHLETIC OR COMMERCIAL

17 VENUES.—No funds awarded under this part may be 

18 used for the modernization, renovation, or repair of 

19 stadiums or other facilities of a public institution 

20 primarily used for athletic contests or events for 

21 which admission is charged to the general public. 

22 ‘‘(e) STATE LIMITATIONS ON INSTITUTIONS.—Noth23 ing in this section shall be construed to prohibit a State 

24 from establishing additional requirements for public instiVerDate Sep 11 2014 00:40 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2191.IS S2191

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1 tutions in the State for the purpose of increasing the af2 fordability of higher education. 

3 ‘‘SEC. 499–4. GRANT FORMULA. 

4 ‘‘(a) GRANT FORMULA.—The Secretary shall award 

5 a block grant to an eligible State for a fiscal year in an 

6 amount equal to the product of— 

7 ‘‘(1) the marginal Federal match amount for 

8 the fiscal year, as determined under subsection (b); 

9 multiplied by 

10 ‘‘(2) the full-time equivalent student number for 

11 the previous fiscal year. 

12 ‘‘(b) FEDERAL MATCH AMOUNT FOR ELIGIBLE

13 STATES.—The marginal Federal match amount shall be 

14 the following: 

15 ‘‘(1) ELIGIBLE STATES WITH NET STATE OPER16 ATING SUPPORT PER FTE STUDENT BETWEEN 50

17 PERCENT AND 130 PERCENT OF THE MAXIMUM FED18 ERAL PELL GRANT.—The marginal Federal match 

19 amount for an eligible State with a net State oper20 ating support per FTE student for the fiscal year 

21 that is equal to or more than 50 percent of the 

22 amount of the maximum Federal Pell Grant under 

23 section 401 for the most recent fiscal year but is less 

24 than 130 percent of such amount, shall be equal to 

25 the product of— 


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1 ‘‘(A) the amount of the maximum Federal 

2 Pell Grant for the most recent fiscal year; mul3 tiplied by 

4 ‘‘(B) the result of the mathematical expression 0.26x 5 2 ¥ 0.14x + 0.005, where x rep6 resents the ratio obtained by dividing the eligi7 ble State’s net State operating support per 

8 FTE student by the amount of the maximum 

9 Federal Pell Grant for the most recent fiscal 

10 year. 

11 ‘‘(2) ELIGIBLE STATES WITH NET STATE OPER12 ATING SUPPORT EQUAL TO OR GREATER THAN 130

13 PERCENT OF THE MAXIMUM FEDERAL PELL

14 GRANT.—The marginal Federal match amount for 

15 an eligible State with a net State operating support 

16 per FTE student for the fiscal year equal to or 

17 greater than 130 percent of the amount of the max18 imum Federal Pell Grant for the most recent fiscal 

19 year, shall be equal to the sum of— 

20 ‘‘(A) the amount calculated under para21 graph (1) for a State with a net State operating 

22 support per FTE student equal to 130 percent 

23 of the amount of the maximum Federal Pell 

24 Grant for the most recent fiscal year; and 


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1 ‘‘(B) 10 percent of the amount by which 

2 the eligible State’s net State operating support 

3 per FTE student exceeds 130 percent of such 

4 maximum Federal Pell Grant, 

5 except that in no case shall the marginal Federal 

6 match under this paragraph exceed an amount equal 

7 to 30 percent of the amount of the maximum Fed8 eral Pell Grant for the most recent fiscal year. 

9 ‘‘(c) RATABLE REDUCTION.—If the sums made avail10 able under this part for any fiscal year are insufficient 

11 to pay the full amounts that all States are eligible to re12 ceive in accordance with this section for such year, the 

13 Secretary shall establish procedures for ratably reducing 

14 each State’s award amount. 

15 ‘‘SEC. 499–5. ACCOUNTABILITY AND ENFORCEMENT. 

16 ‘‘(a) ANNUAL REPORT.— 

17 ‘‘(1) IN GENERAL.—Beginning for the first fis18 cal year after a State receives a block grant under 

19 this part, the State shall prepare and submit an an20 nual report to the Secretary, which shall include de21 tailed information about the State’s use of the grant 

22 funds to increase the affordability of public higher 

23 education and increase the enrollment and comple24 tion rates of low-income students (as measured by 

25 eligibility for a Federal Pell Grant). 


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1 ‘‘(2) CONTENTS.—A report described in para2 graph (1) shall— 

3 ‘‘(A) describe the cause of any increases in 

4 public higher education costs and the sources of 

5 new funding to address such increases; 

6 ‘‘(B) describe all actions taken to 

7 incentivize public institutions to reduce tuition 

8 costs, or mitigate the need to raise tuition and 

9 fees for in-State students; 

10 ‘‘(C) explain the extent to which public in11 stitutions supported the enrollment of low-in12 come students who are eligible for Federal Pell 

13 Grants or other need-based financial assistance; 

14 ‘‘(D) disclose how the State distributed the 

15 allotment provided under this part to all public 

16 institutions, and the rationale for such distribu17 tion; 

18 ‘‘(E) include the aggregated graduation 

19 rates for low-income students (based on eligi20 bility for Federal Pell Grants), part-time stu21 dents, and transfer students, disaggregated by 

22 type of degree or credential; 

23 ‘‘(F) detail State efforts to improve the re24 tention and graduation rates of low-income stuVerDate Sep 11 2014 00:40 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S2191.IS S2191

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1 dents at both 2-year and 4-year institutions of 

2 higher education; and 

3 ‘‘(G) be publicly available in a manner that 

4 is easily accessible to parents, students, and 

5 consumer advocates. 

6 ‘‘(b) MAINTAINING NET STATE OPERATING SUP7 PORT PER FTE STUDENT.— 

8 ‘‘(1) IN GENERAL.—Each State receiving an al9 lotment under this part for a fiscal year shall— 

10 ‘‘(A) ensure that the amount expended by 

11 the State, from funds derived from non-Federal 

12 sources, for net State operating support per 

13 FTE student for the preceding fiscal year was 

14 not less than the amount expended by the State 

15 for net State operating support per FTE stu16 dent for the second preceding fiscal year; and 

17 ‘‘(B) demonstrate the State’s compliance 

18 with subparagraph (A) by providing the Sec19 retary with a written assurance and detailed 

20 documentation. 

21 ‘‘(2) PENALTY.—If a State does not comply 

22 with paragraph (1), the State’s grant award under 

23 this part shall be reduced by an amount equal to the 

24 product of— 

25 ‘‘(A) the difference between— 


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1 ‘‘(i) the net State operating support 

2 per FTE student for the second preceding 

3 fiscal year; minus 

4 ‘‘(ii) the net State operating support 

5 per FTE student for the preceding fiscal 

6 year; multiplied by 

7 ‘‘(B) the full-time equivalent student num8 ber for the previous fiscal year. 

9 ‘‘(c) MAINTENANCE OF EFFORT FOR STATE-BASED

10 FINANCIAL AID AND AVOIDANCE OF TUITION INFLA11 TION.—Each State receiving an allotment under this part 

12 for a fiscal year shall, as a condition of receiving the allot13 ment— 

14 ‘‘(1) maintain the level of State student need15 based financial aid support provided for costs associ16 ated with postsecondary education at not less than 

17 the average annual level of such support provided 

18 for the 3 academic years immediately preceding the 

19 year for which the State is receiving the allotment; 

20 and 

21 ‘‘(2) ensure that for the academic year imme22 diately following the academic year for which the 

23 State is receiving the allotment, all public institu24 tions of higher education in the State will not in25 crease tuition for in-State students by a percentage 


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1 greater than the estimated percentage increase in 

2 the Consumer Price Index (as determined by the 

3 Secretary, using the definition in section 478(f)) for 

4 the calendar year for which the State is receiving the 

5 allotment. 

6 ‘‘(d) AUTHORITY TO COMPROMISE.—Notwith7 standing subsections (b) and (c), the Secretary may waive 

8 any maintenance of support and effort requirement de9 scribed in such subsections for a State if there is a clear 

10 case of a significant economic downturn in the State as 

11 evidenced by a reduction in State domestic product, real 

12 per capita income, and employment. Such determination 

13 shall only be made by the Secretary following a written 

14 appeal by the State that documents recent and significant 

15 decreases in economic activity in the State. 

16 ‘‘SEC. 499–6. AUTHORIZATION OF APPROPRIATIONS. 

17 ‘‘There are authorized to be appropriated to carry out 

18 this part such sums as may be necessary for fiscal year 

19 2016 and each of the five succeeding fiscal years.’’. 

20 TITLE II—TAX PROVISIONS 

21 SEC. 201. PERMANENT EXTENSION AND MODIFICATION OF 

22 AMERICAN OPPORTUNITY AND LIFETIME 

23 LEARNING CREDITS. 

24 (a) IN GENERAL.—Section 25A of the Internal Rev25 enue Code of 1986 is amended to read as follows: 


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1 ‘‘SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT. 

2 ‘‘(a) IN GENERAL.—In the case of an individual, 

3 there shall be allowed as a credit against the tax imposed 

4 by this chapter for the taxable year, with respect to each 

5 eligible student, an amount equal to the sum of— 

6 ‘‘(1) 100 percent of so much of the qualified 

7 tuition and related expenses paid by the taxpayer 

8 during the taxable year (for education furnished to 

9 the eligible student during any academic period be10 ginning in such taxable year) as does not exceed 

11 $2,000, plus 

12 ‘‘(2) 25 percent of so much of such expenses so 

13 paid as exceeds the dollar amount in effect under 

14 paragraph (1) but does not exceed twice such dollar 

15 amount. 

16 ‘‘(b) PORTION OF CREDIT REFUNDABLE.—60 per17 cent of the credit allowable under subsection (a) with re18 spect to each eligible student (determined without regard 

19 to this subsection and section 26(a) and after application 

20 of all other provisions of this section) shall be treated as 

21 a credit allowable under subpart C (and not under this 

22 part). The preceding sentence shall not apply to any tax23 payer for any taxable year if such taxpayer is a child to 

24 whom section 1(g) applies for such taxable year. 

25 ‘‘(c) 5-YEAR LIMITATION.—No credit shall be allowed 

26 under subsection (a) with respect to any eligible student 


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1 for any taxable year if such student was taken into ac2 count in determining the credit allowed under such sub3 section (by the taxpayer or any other individual) for any 

4 5 prior taxable years. 

5 ‘‘(d) LIFETIME LEARNING CREDIT.— 

6 ‘‘(1) IN GENERAL.—In the case of an indi7 vidual, there shall be allowed as a credit against the 

8 tax imposed by this chapter an amount equal to 20 

9 percent of so much of the qualified tuition and re10 lated expenses paid by the taxpayer during the tax11 able year (for education furnished during any aca12 demic period beginning in such taxable year) as does 

13 not exceed $10,000. 

14 ‘‘(2) SPECIAL RULES FOR DETERMINING EX15 PENSES.— 

16 ‘‘(A) COORDINATION WITH AMERICAN OP17 PORTUNITY TAX CREDIT.—The qualified tuition 

18 and related expenses with respect to an indi19 vidual who is an eligible student for whom a 

20 credit under subsection (a) is allowed for the 

21 taxable year shall not be taken into account 

22 under this subsection. 

23 ‘‘(B) EXPENSES ELIGIBLE FOR LIFETIME

24 LEARNING CREDIT.—For purposes of paragraph 

25 (1), qualified tuition and related expenses shall 


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1 include expenses described in subsection (f)(2) 

2 with respect to any course of instruction at an 

3 eligible educational institution to acquire or im4 prove job skills of the individual. 

5 ‘‘(e) LIMITATION BASED ON MODIFIED ADJUSTED

6 GROSS INCOME.— 

7 ‘‘(1) IN GENERAL.—The amount allowable as a 

8 credit under subsection (a) or (d) for any taxable 

9 year shall be reduced (but not below zero) by an 

10 amount which bears the same ratio to the amount 

11 so allowable (determined without regard to this sub12 section and subsection (b) but after application of all 

13 other provisions of this section) as— 

14 ‘‘(A) the excess of— 

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

16 gross income for such taxable year, over 

17 ‘‘(ii) $80,000 in the case of the credit 

18 under subsection (a), or $40,000 in the 

19 case of the credit under subsection (d), 

20 bears to 

21 ‘‘(B) $10,000. 

22 ‘‘(2) JOINT RETURNS.—In the case of a joint 

23 return, each of the dollar amounts in effect under 

24 paragraph (1) shall be increased to twice such 

25 amount. 


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

2 For purposes of this subsection, the term ‘modified 

3 adjusted gross income’ means the adjusted gross in4 come of the taxpayer for the taxable year increased 

5 by any amount excluded from gross income under 

6 section 911, 931, or 933. 

7 ‘‘(4) INFLATION ADJUSTMENT FOR LIFETIME

8 LEARNING CREDIT PHASEOUT.— 

9 ‘‘(A) IN GENERAL.—In the case of a tax10 able year beginning after 2001, the $40,000 

11 amount in paragraph (1)(A)(ii) shall be in12 creased by an amount equal to— 

13 ‘‘(i) such dollar amount, multiplied by 

14 ‘‘(ii) the cost-of-living adjustment de15 termined under section 1(f)(3) for the cal16 endar year in which the taxable year be17 gins, determined by substituting ‘calendar 

18 year 2000’ for ‘calendar year 1992’ in sub19 paragraph (B) thereof. 

20 ‘‘(B) ROUNDING.—If any amount as ad21 justed under subparagraph (A) is not a multiple 

22 of $1,000, such amount shall be rounded to the 

23 next lowest multiple of $1,000. 

24 ‘‘(f) DEFINITIONS.—For purposes of this section— 


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1 ‘‘(1) ELIGIBLE STUDENT.—The term ‘eligible 

2 student’ means, with respect to any academic period, 

3 a student who— 

4 ‘‘(A) meets the requirements of section 

5 484(a)(1) of the Higher Education Act of 1965 

6 (20 U.S.C. 1091(a)(1)), as in effect on August 

7 5, 1997, and 

‘‘(B) is carrying at least 1 8 ⁄2 the normal 

9 full-time work load for the course of study the 

10 student is pursuing. 

11 ‘‘(2) QUALIFIED TUITION AND RELATED EX12 PENSES.— 

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

14 tuition and related expenses’ means tuition, 

15 fees, and course materials, required for enroll16 ment or attendance of— 

17 ‘‘(i) the taxpayer, 

18 ‘‘(ii) the taxpayer’s spouse, or 

19 ‘‘(iii) any dependent of the taxpayer 

20 with respect to whom the taxpayer is al21 lowed a deduction under section 151, 

22 at an eligible educational institution for courses 

23 of instruction of such individual at such institu24 tion. 


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1 ‘‘(B) COMPUTER-RELATED EXPENSES IN2 CLUDED.—Except as provided in subsection 

3 (g)(9), such term includes expenses for the pur4 chase of computer or peripheral equipment (as 

5 defined in section 168(i)(2)(B)), computer soft6 ware (as defined in section 197(e)(3)(B)), or 

7 Internet access and related services, if such 

8 equipment, software, or services are to be used 

9 primarily by the eligible student during any of 

10 the years the student is enrolled at an eligible 

11 educational institution. 

12 ‘‘(C) SPECIAL NEEDS SERVICES IN13 CLUDED.—Such term includes expenses for spe14 cial needs services in the case of a special needs 

15 beneficiary (within the meaning of section 

16 529(e)(3)(A)(ii) as in effect on the day before 

17 the date of the enactment of the Promoting Ac18 cess and Retention Through New Efforts to Re19 quire Shared Higher Investments in Postsec20 ondary Success Act) which are incurred in con21 nection with the enrollment or attendance of 

22 the student at an eligible educational institu23 tion. 

24 ‘‘(D) EXCEPTION FOR EDUCATION INVOLV25 ING SPORTS, ETC.—Such term does not include 


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1 expenses with respect to any course or other 

2 education involving sports, games, or hobbies, 

3 unless such course or other education is part of 

4 the individual’s degree program. 

5 ‘‘(E) EXCEPTION FOR NONACADEMIC

6 FEES.—Such term does not include student ac7 tivity fees, athletic fees, insurance expenses, or 

8 other expenses unrelated to an individual’s aca9 demic course of instruction. 

10 ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 

11 The term ‘eligible educational institution’ means an 

12 institution— 

13 ‘‘(A) which is described in section 481 of 

14 the Higher Education Act of 1965 (20 U.S.C. 

15 1088), as in effect on August 5, 1997, and 

16 ‘‘(B) which is eligible to participate in a 

17 program under title IV of such Act. 

18 ‘‘(g) SPECIAL RULES.— 

19 ‘‘(1) IDENTIFICATION REQUIREMENT.—No 

20 credit shall be allowed under this section to a tax21 payer with respect to the qualified tuition and re22 lated expenses of an individual unless the taxpayer 

23 includes the name and taxpayer identification num24 ber of such individual, and the employer identifica25 tion number of any institution to which such exVerDate Sep 11 2014 00:40 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00021 Fmt 6652 Sfmt 6201 E:\BILLS\S2191.IS S2191

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1 penses were paid, on the return of tax for the tax2 able year. 

3 ‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLAR4 SHIPS, ETC.— 

5 ‘‘(A) IN GENERAL.—The amount of quali6 fied tuition and related expenses otherwise 

7 taken into account under subsection (a) or (d) 

8 with respect to an individual for an academic 

9 period shall be reduced (before the application 

10 of subsection (e)) by the sum of any amounts 

11 paid for the benefit of such individual which are 

12 allocable to such period as— 

13 ‘‘(i) a qualified scholarship which is 

14 excludable from gross income under section 

15 117, 

16 ‘‘(ii) an educational assistance allow17 ance under chapter 30, 31, 32, 34, or 35 

18 of title 38, United States Code, or under 

19 chapter 1606 of title 10, United States 

20 Code, and 

21 ‘‘(iii) a payment (other than a gift, 

22 bequest, devise, or inheritance within the 

23 meaning of section 102(a)) for such indi24 vidual’s educational expenses, or attrib25 utable to such individual’s enrollment at an 


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1 eligible educational institution, which is ex2 cludable from gross income under any law 

3 of the United States. 

4 ‘‘(B) COORDINATION WITH PELL GRANTS

5 NOT USED FOR QUALIFIED TUITION AND RE6 LATED EXPENSES.—For purposes of subpara7 graph (A), the amount of any Federal Pell 

8 Grant under section 401 of the Higher Edu9 cation Act of 1965 (20 U.S.C. 1070a) shall be 

10 reduced (but not below zero) by the amount of 

11 expenses (other than qualified tuition and re12 lated expenses) which are taken into account in 

13 determining the cost of attendance (as defined 

14 in section 472 of the Higher Education Act of 

15 1965, as in effect on the date of the enactment 

16 of the Promoting Access and Retention 

17 Through New Efforts to Require Shared High18 er Investments in Postsecondary Success Act) 

19 of such individual at an eligible educational in20 stitution for the academic period for which the 

21 credit under subsection (a) or (d) (whichever is 

22 applicable) is being determined. 

23 ‘‘(3) TREATMENT OF EXPENSES PAID BY DE24 PENDENT.—If a deduction under section 151 with 

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1 payer for a taxable year beginning in the calendar 

2 year in which such individual’s taxable year begins— 

3 ‘‘(A) no credit shall be allowed under this 

4 section to such individual for such individual’s 

5 taxable year, 

6 ‘‘(B) qualified tuition and related expenses 

7 paid by such individual during such individual’s 

8 taxable year shall be treated for purposes of 

9 this section as paid by such other taxpayer, and 

10 ‘‘(C) a statement described in paragraph 

11 (8) and received by such individual shall be 

12 treated as received by the taxpayer. 

13 ‘‘(4) TREATMENT OF CERTAIN PREPAY14 MENTS.—If qualified tuition and related expenses 

15 are paid by the taxpayer during a taxable year for 

16 an academic period which begins during the first 3 

17 months following such taxable year, such academic 

18 period shall be treated for purposes of this section 

19 as beginning during such taxable year. 

20 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit 

21 shall be allowed under this section for any amount 

22 for which a deduction is allowed under any other 

23 provision of this chapter. 

24 ‘‘(6) NO CREDIT FOR MARRIED INDIVIDUALS

25 FILING SEPARATE RETURNS.—If the taxpayer is a 


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•S 2191 IS

1 married individual (within the meaning of section 

2 7703), this section shall apply only if the taxpayer 

3 and the taxpayer’s spouse file a joint return for the 

4 taxable year. 

5 ‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is 

6 a nonresident alien individual for any portion of the 

7 taxable year, this section shall apply only if such in8 dividual is treated as a resident alien of the United 

9 States for purposes of this chapter by reason of an 

10 election under subsection (g) or (h) of section 6013. 

11 ‘‘(8) PAYEE STATEMENT REQUIREMENT.—Ex12 cept as otherwise provided by the Secretary, no cred13 it shall be allowed under this section unless the tax14 payer receives a statement furnished under section 

15 6050S(d) which contains all of the information re16 quired by paragraph (2) thereof. 

17 ‘‘(9) REDUCED CREDIT IN CASE OF CERTAIN

18 STUDENTS.—In the case of a student who is not an 

19 eligible student for the taxable year solely by reason 

20 of subparagraph (B) of subsection (f)(1), the stu21 dent shall be treated as an eligible student for pur22 poses of this section (other than subsection 

23 (f)(2)(B)) for such taxable year except that the dol24 lar amount in effect under subsection (a)(1) shall be 


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•S 2191 IS

1 1 ⁄2 of the amount otherwise in effect for such taxable 

2 year. 

3 ‘‘(h) REGULATIONS.—The Secretary may prescribe 

4 such regulations or other guidance as may be necessary 

5 or appropriate to carry out this section, including regula6 tions providing for a recapture of the credit allowed under 

7 this section in cases where there is a refund in a subse8 quent taxable year of any amount which was taken into 

9 account in determining the amount of such credit.’’. 

10 (b) REQUIREMENT TO REPORT TUITION PAID RATH11 ER THAN TUITION BILLED.—Section 6050S(b)(2)(B)(i) 

12 of the Internal Revenue Code of 1986 is amended by strik13 ing ‘‘or the aggregate amount billed’’. 

14 (c) REPEAL OF EDUCATION SAVINGS BONDS.— 

15 (1) IN GENERAL.—Part III of subchapter B of 

16 chapter 1 of the Internal Revenue Code of 1986 is 

17 amended by striking section 135. 

18 (2) TABLE OF CONTENTS.—The table of sec19 tions for part III of subchapter B of chapter 1 of 

20 such Code is amended by striking the item relating 

21 to section 135. 

22 (d) TERMINATION OF COVERDELL EDUCATION SAV23 INGS ACCOUNTS.— 


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•S 2191 IS

1 (1) IN GENERAL.—Section 530 of the Internal 

2 Revenue Code of 1986 is amended by adding at the 

3 end the following new subsection: 

4 ‘‘(i) TERMINATION.—Subsection (a) shall not apply 

5 to the portion of any Coverdell education savings account 

6 that is attributable to a contribution made after the later 

7 of— 

8 ‘‘(1) December 31, 2015, or 

9 ‘‘(2) the date of the enactment of this sub10 section.’’. 

11 (2) ROLLOVERS TO QUALIFIED TUITION PRO12 GRAMS.—Subsection (b) of section 529 of such Code 

13 is amended by adding at the end the following new 

14 paragraph: 

15 ‘‘(7) ROLLOVERS FROM COVERDELL EDU16 CATION SAVINGS ACCOUNTS.—A program shall not 

17 be treated as a qualified tuition program for any 

18 taxable year beginning after December 31, 2015, 

19 and before January 1, 2017, unless it accepts (with20 out regard to any contribution limitations otherwise 

21 applicable under the program) contributions made 

22 during such taxable year which are paid or distrib23 uted from a Coverdell education savings account for 

24 the benefit of the same designated beneficiary as 


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•S 2191 IS

1 such program or a member of the family of such 

2 beneficiary.’’. 

3 (e) CONFORMING AMENDMENTS.— 

4 (1) Section 62(d)(2) of such Code is amended 

5 by striking ‘‘135,’’. 

6 (2) Sections 86(b)(2)(A), 137(b)(3)(B), 

7 199(d)(2)(A), 219(g)(3)(A)(ii), and 221(b)(2)(C)(ii) 

8 of such Code are each amended by striking ‘‘135,’’. 

9 (3) Section 221(d) of such Code is amended— 

10 (A) by striking ‘‘25A(f)(2)’’ in paragraph 

11 (2) and inserting ‘‘25A(f)(3)’’, and 

12 (B) by striking ‘‘25A(b)(3)’’ in paragraph 

13 (3) and inserting ‘‘25A(f)(1)’’. 

14 (4) Section 222 of such Code is amended— 

15 (A) by striking ‘‘elects to have section 25A 

16 apply’’ in subsection (c)(2)(A) and inserting 

17 ‘‘claims the credit under section 25A’’, 

18 (B) by striking ‘‘IF CREDIT ELECTED’’ in 

19 the heading of subparagraph (A) of subsection 

20 (c)(2) and inserting ‘‘FOR 25A EXPENSES’’, 

21 (C) by striking ‘‘135,’’ in subsection 

22 (c)(2)(B), and 

23 (D) by striking ‘‘25A(f)’’ in subsection 

24 (d)(1) and inserting ‘‘25A(f)(2)’’. 


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•S 2191 IS

1 (5) Section 469(i)(3)(F)(ii) of such Code is 

2 amended by striking ‘‘sections 135 and 137’’ and in3 serting ‘‘section 137’’. 

4 (6) Section 530(d)(2)(C) of such Code is 

5 amended by striking ‘‘HOPE AND LIFETIME LEARN6 ING CREDITS’’ in the heading and inserting ‘‘AMER7 ICAN OPPORTUNITY TAX CREDIT’’. 

8 (7) Section 6103(l)(20)(A)(iv) is amended by 

9 striking ‘‘sections 135 and 911’’ and inserting ‘‘sec10 tion 911’’. 

11 (8) Section 6211(b)(4)(A) of such Code is 

12 amended by striking ‘‘subsection (i)(6)’’ and insert13 ing ‘‘subsection (b)’’. 

14 (9) Section 6213(g)(2)(J) of such Code is 

15 amended by striking ‘‘TIN required under section 

16 25A(g)(1)’’ and inserting ‘‘TIN or employer identi17 fication number required under section 25A(g)(1)’’. 

18 (10) Section 1004(c) of division B of the Amer19 ican Recovery and Reinvestment Tax Act of 2009 is 

20 amended— 

21 (A) in paragraph (1)— 

22 (i) by striking ‘‘section 25A(i)(6)’’ 

23 each place it appears and inserting ‘‘sec24 tion 25A(b)’’, 


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•S 2191 IS

1 (ii) by striking ‘‘with respect to tax2 able years beginning after 2008 and before 

3 2018’’ in subparagraph (A) and inserting 

4 ‘‘with respect to each taxable year’’, and 

5 (iii) by striking ‘‘for taxable years be6 ginning after 2008 and before 2018’’ in 

7 subparagraph (B) and inserting ‘‘for each 

8 taxable year’’, 

9 (B) in paragraph (2), by striking ‘‘Section 

10 25A(i)(6)’’ and inserting ‘‘Section 25A(b)’’, and 

11 (C) in paragraph (3)(C), by striking ‘‘sub12 section (i)(6)’’ and inserting ‘‘subsection (b)’’. 

13 (11) The table of sections for subpart A of part 

14 IV of subchapter A of chapter 1 of the Internal Rev15 enue Code of 1986 is amended by striking the item 

16 relating to section 25A and inserting the following 

17 new item: 

‘‘Sec. 25A. American opportunity tax credit.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2017. 

21 SEC. 202. EXPANSION OF EXCLUSION FOR EDUCATIONAL 

22 ASSISTANCE PROGRAMS. 

23 (a) IN GENERAL.—Paragraph (2) of section 127(a) 

24 of the Internal Revenue Code of 1986 is amended— 


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•S 2191 IS

1 (1) by striking ‘‘$5,250’’ in the heading and in2 serting ‘‘$10,500’’, and 

3 (2) by striking ‘‘$5,250’’ both places it appears 

4 and inserting ‘‘$10,500’’. 

5 (b) EXPENSES OF EMPLOYEE’S SPOUSE AND DE6 PENDENTS.—Paragraph (2) of section 127(c) of the Inter7 nal Revenue Code of 1986 is amended by striking ‘‘in8 cludes’’ and all that follows and inserting ‘‘includes, for 

9 any year— 

10 ‘‘(A) an individual who is an employee 

11 within the meaning of section 401(c)(1) (relat12 ing to self-employed individuals), and 

13 ‘‘(B) any spouse or dependent of an em14 ployee.’’. 

15 (c) EMPLOYER-PROVIDED EDUCATIONAL LOAN RE16 PAYMENT ASSISTANCE.— 

17 (1) IN GENERAL.—Paragraph (1) of section 

18 127(c) of the Internal Revenue Code of 1986 is 

19 amended— 

20 (A) by striking ‘‘and’’ at the end of sub21 paragraph (A), 

22 (B) by striking the comma at the end of 

23 subparagraph (B) and inserting ‘‘, and’’, and 

24 (C) by inserting after subparagraph (B) 

25 the following new subparagraph: 


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•S 2191 IS

1 ‘‘(C) the payment by an employer of any 

2 portion of the indebtedness of an employee pur3 suant to a student loan of the employee,’’. 

4 (2) STUDENT LOAN.—Section 127(c) of such 

5 Code is amended— 

6 (A) by redesignating paragraphs (4), (5), 

7 (6), and (7) as paragraphs (5), (6), (7), and 

8 (8), respectively, and 

9 (B) by inserting after paragraph (3) the 

10 following new paragraph: 

11 ‘‘(4) STUDENT LOAN.—The term ‘student loan’ 

12 means any loan to an individual to assist the indi13 vidual in attending an educational organization de14 scribed in section 170(b)(1)(A)(ii).’’. 

15 (3) CONFORMING AMENDMENT; DENIAL OF

16 DOUBLE BENEFIT.—Paragraph (1) of section 221(e) 

17 of such Code is amended by inserting before the pe18 riod the following: ‘‘, or for which an exclusion is al19 lowable under section 127 to the taxpayer’s employer 

20 by reason of the payment by such employer of any 

21 indebtedness on a student loan of the taxpayer’’. 

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

23 this section shall apply to expenses paid or incurred and 

24 loan payments made in taxable years beginning after De25 cember 31, 2015. 


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•S 2191 IS

1 SEC. 203. EXCLUSION OF CERTAIN STUDENT LOAN REPAY2 MENTS AND LOAN FORGIVENESS. 

3 (a) IN GENERAL.—Paragraph (1) of section 108(f) 

4 of the Internal Revenue Code of 1986 is amended by strik5 ing ‘‘(in whole or in part)’’ and all that follows and insert6 ing ‘‘(in whole or in part) or, in the case of paragraph 

7 (3), the repayment of any student loan if such discharge 

8 or repayment meets the requirements of paragraph (2), 

9 (3), or (4).’’. 

10 (b) PUBLIC INTEREST STUDENT LOANS.—Para11 graph (2) of section 108(f) of the Internal Revenue Code 

12 of 1986 is amended to read as follows: 

13 ‘‘(2) CERTAIN PUBLIC INTEREST STUDENT

14 LOANS.— 

15 ‘‘(A) IN GENERAL.—A discharge meets the 

16 requirements of this paragraph if it is made 

17 pursuant to a provision of a student loan de18 scribed in subparagraph (B) under which all or 

19 part of the indebtedness of an individual would 

20 be discharged if the individual worked for a cer21 tain period of time in certain professions for 

22 any of a broad class of employers. 

23 ‘‘(B) LIMITATION.—A student loan is de24 scribed in this subparagraph if such loan is 

25 made— 


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•S 2191 IS

1 ‘‘(i) by the United States, or an in2 strumentality or agency thereof, 

3 ‘‘(ii) by a State, territory, or posses4 sion of the United States, or the District 

5 of Columbia, or any political subdivision 

6 thereof, 

7 ‘‘(iii) by a public benefit corpora8 tion— 

9 ‘‘(I) which is exempt from tax10 ation under section 501(c)(3), 

11 ‘‘(II) which has assumed control 

12 over a State, county, or municipal 

13 hospital, and 

14 ‘‘(III) whose employees have been 

15 deemed to be public employees under 

16 State law, 

17 ‘‘(iv) by any educational organization 

18 described in section 170(b)(1)(A)(ii)— 

19 ‘‘(I) pursuant to an agreement 

20 with any entity described in clause (i), 

21 (ii), or (iii) under which the funds 

22 from which the loan was made were 

23 provided to such educational organiza24 tion, or 


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•S 2191 IS

1 ‘‘(II) pursuant to a program of 

2 such educational organization which is 

3 designed to encourage its students to 

4 serve in occupations with unmet needs 

5 or in areas with unmet needs and 

6 under which the services provided by 

7 the students (or former students) are 

8 for or under the direction of a govern9 mental unit or an organization de10 scribed in section 501(c)(3) and ex11 empt from tax under section 501(a), 

12 or 

13 ‘‘(v) by an educational organization 

14 described in section 170(b)(1)(A)(ii) or an 

15 organization exempt from tax under sec16 tion 501(a)— 

17 ‘‘(I) to refinance a loan that 

18 meets the requirements of clause (i), 

19 (ii), (iii), or (iv), or 

20 ‘‘(II) to refinance a loan to an in21 dividual to assist the individual in at22 tending any such educational organi23 zation, but only if the refinancing loan 

24 is pursuant to a program of the refiVerDate Sep 11 2014 00:40 Oct 22, 2015 Jkt 059200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\S2191.IS S2191

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•S 2191 IS

1 nancing organization which is de2 signed as described in clause (iv)(II). 

3 ‘‘(C) EXCEPTION FOR DISCHARGES ON AC4 COUNT OF SERVICES PERFORMED FOR CERTAIN

5 LENDERS.—A discharge of a loan made by an 

6 organization described in subparagraph (B)(iv) 

7 does not meet the requirements of this para8 graph if the discharge is on account of services 

9 performed for either such organization.’’. 

10 (c) INSTITUTION-PROVIDED LOAN REPAYMENTS.— 

11 Paragraph (3) of section 108(f) of the Internal Revenue 

12 Code of 1986 is amended to read as follows: 

13 ‘‘(3) INSTITUTION-PROVIDED LOAN REPAY14 MENTS.—A repayment meets the requirements of 

15 this paragraph if— 

16 ‘‘(A) it is made by an organization de17 scribed in section 501(c)(3) that is exempt from 

18 tax under section 501(a), 

19 ‘‘(B) it is made pursuant to a program 

20 that repays all or a portion of the student loans 

21 of individuals on the condition that at the time 

22 of the repayment the individuals are working 

23 for or under the direction of a governmental 

24 unit or an organization described in section 


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•S 2191 IS

1 501(c)(3) and exempt from tax under section 

2 501(a), and 

3 ‘‘(C) it is not made on account of services 

4 performed for the organization described in 

5 subparagraph (A).’’. 

6 (d) CERTAIN OTHER STUDENT LOAN FORGIVE7 NESS.—Subsection (f) of section 108 of the Internal Rev8 enue Code of 1986 is amended— 

9 (1) by redesignating paragraph (4) as para10 graph (5), and 

11 (2) by inserting after paragraph (3) the fol12 lowing new paragraph: 

13 ‘‘(4) CERTAIN OTHER STUDENT LOAN FORGIVE14 NESS.—A discharge meets the requirements of this 

15 paragraph if it is made— 

16 ‘‘(A) in the case of a loan made by the 

17 United States or an instrumentality or agency 

18 thereof, pursuant to— 

19 ‘‘(i) an income-based repayment plan 

20 under section 493C of the Higher Edu21 cation Act of 1965, or 

22 ‘‘(ii) an income contingent repayment 

23 plan in accordance with section 455 of 

24 such Act, or 


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•S 2191 IS

1 ‘‘(B) because of the death or disability of 

2 the student.’’. 

3 (e) STUDENT LOAN.—Subsection (f) of section 108 

4 of the Internal Revenue Code of 1986, as amended by sub5 section (d), is amended— 

6 (1) by redesignating paragraph (5) as para7 graph (6), and 

8 (2) by inserting after paragraph (4) the fol9 lowing new paragraph: 

10 ‘‘(5) STUDENT LOAN.—For purposes of this 

11 subsection, the term ‘student loan’ means any loan 

12 to an individual to assist the individual in attending 

13 an educational organization described in section 

14 170(b)(1)(A)(ii).’’. 

15 (f) CONFORMING AMENDMENTS.— 

16 (1) Section 127(c)(4) of the Internal Revenue 

17 Code of 1986, as added by this Act, is amended by 

18 striking ‘‘means any loan’’ and all that follows and 

19 inserting ‘‘has the meaning given such term by sec20 tion 108(f)(5).’’. 

21 (2) Sections 3121(a)(20), 3231(e)(5), 

22 3306(b)(16), and 3401(a)(19) of such Code are each 

23 amended by striking ‘‘108(f)(4)’’ and inserting 

24 ‘‘108(f)(6)’’. 


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•S 2191 IS

1 (g) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to discharges of indebtedness after 

3 December 31, 2015. 

4 SEC. 204. UNIFORM DEFINITION OF QUALIFYING EDU5 CATION EXPENSES. 

6 (a) EDUCATIONAL ASSISTANCE PROGRAMS.—Para7 graph (1) of section 127(c) of the Internal Revenue Code 

8 of 1986 is amended— 

9 (1) by striking ‘‘(including, but not limited to, 

10 tuition, fees, and similar payments, books, supplies, 

11 and equipment)’’ in subparagraph (A) and inserting 

12 ‘‘(including qualified tuition and related expenses, as 

13 defined in section 25A(f)(2))’’, and 

14 (2) by striking the second sentence. 

15 (b) QUALIFIED SCHOLARSHIPS.—Paragraph (2) of 

16 section 117(b) of the Internal Revenue Code of 1986 is 

17 amended by striking ‘‘means—’’ and all that follows and 

18 inserting ‘‘has the meaning given such term by section 

19 25A(f)(2).’’. 

20 (c) QUALIFIED TUITION PROGRAMS.— 

21 (1) COMPUTER TECHNOLOGY AND EQUIPMENT

22 ALLOWED AS A QUALIFIED HIGHER EDUCATION EX23 PENSE FOR YEARS BEFORE 2018.— 


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•S 2191 IS

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

2 529(e)(3)(A) of the Internal Revenue Code of 

3 1986 is amended to read as follows: 

4 ‘‘(iii) expenses for the purchase of 

5 computer or peripheral equipment (as de6 fined in section 168(i)(2)(B)), computer 

7 software (as defined in section 

8 197(e)(3)(B)), or Internet access and re9 lated services, if such equipment, software, 

10 or services are to be used primarily by the 

11 beneficiary during any of the years the 

12 beneficiary is enrolled at an eligible edu13 cational institution.’’. 

14 (B) EFFECTIVE DATE.—The amendment 

15 made by this paragraph shall apply to taxable 

16 years beginning after December 31, 2015. 

17 (2) PERMANENT DEFINITION.—Paragraph (3) 

18 of section 529(e) of such Code, as amended by para19 graph (1), is amended— 

20 (A) by striking subparagraph (A) and in21 serting the following new subparagraph: 

22 ‘‘(A) IN GENERAL.—Except as provided in 

23 subparagraph (B), the term ‘qualified higher 

24 education expenses’ has the same meaning as 


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•S 2191 IS

1 the term ‘qualified tuition and related expenses’ 

2 as defined in section 25A(f)(2).’’, 

3 (B) by striking ‘‘section 25A(b)(3)’’ in 

4 clause (i) of subparagraph (B) and inserting 

5 ‘‘section 25A(f)(1) (not including any individual 

6 treated as an eligible student solely by reason 

7 of section 25A(g)(9))’’, and 

8 (C) by striking ‘‘such institution’’ in clause 

9 (i) of subparagraph (B) and inserting ‘‘an eligi10 ble educational institution’’. 

11 (d) TECHNICAL AMENDMENT.—Clause (iii) of section 

12 530(b)(3)(A) of the Internal Revenue Code of 1986 is 

13 amended by striking ‘‘(as defined in section 

14 170(e)(6)(F)(i)) or’’ and inserting ‘‘described in section 

15 25A(f)(2)(B) or any’’. 

16 (e) REPEAL OF DEADWOOD.— 

17 (1) IN GENERAL.—Part II of subchapter Y of 

18 chapter 1 of the Internal Revenue Code of 1986 is 

19 amended by striking section 1400O. 

20 (2) CLERICAL AMENDMENT.—The table of sec21 tions for part II of subchapter Y of chapter 1 of 

22 such Code is amended by striking the item relating 

23 to section 1400O. 

24 (f) EFFECTIVE DATE.—Except as provided in sub25 section (d)(1)(B), the amendments made by this section 


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•S 2191 IS

1 shall apply to taxable years beginning after December 31, 

2 2017. 

3 SEC. 205. EXPANSION OF PELL GRANT EXCLUSION FROM 

4 GROSS INCOME; TREATMENT UNDER HOPE 

5 SCHOLARSHIP AND LIFETIME LEARNING 

6 CREDITS. 

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

8 of the Internal Revenue Code of 1986 is amended by strik9 ing ‘‘received by an individual’’ and all that follows and 

10 inserting ‘‘received by an individual— 

11 ‘‘(A) as a scholarship or fellowship grant 

12 to the extent the individual establishes that, in 

13 accordance with the conditions of the grant, 

14 such amount was used for qualified tuition and 

15 related expenses, or 

16 ‘‘(B) as a Federal Pell Grant under section 

17 401 of the Higher Education Act of 1965 (as 

18 in effect on the date of the enactment of this 

19 subparagraph).’’. 

20 (b) COORDINATION WITH HOPE SCHOLARSHIP AND

21 LIFETIME LEARNING CREDITS.—Paragraph (2) of section 

22 25A(g) of the Internal Revenue Code of 1986 is amend23 ed— 


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•S 2191 IS

1 (1) by redesignating subparagraphs (A), (B), 

2 and (C) as clauses (i), (ii), and (iii), respectively, 

3 and by moving such clauses 2 ems to the right, 

4 (2) by striking ‘‘ETC.—The amount’’ and in5 serting ‘‘ETC.— 

6 ‘‘(A) IN GENERAL.—The amount’’, and 

7 (3) by adding at the end the following new sub8 paragraph: 

9 ‘‘(B) COORDINATION WITH PELL GRANTS

10 NOT USED FOR QUALIFIED TUITION AND RE11 LATED EXPENSES.—For purposes of subpara12 graph (A), the amount of any Federal Pell 

13 Grant under section 401 of the Higher Edu14 cation Act of 1965 (20 U.S.C. 1070a) shall be 

15 reduced (but not below zero) by the amount of 

16 expenses (other than qualified tuition and re17 lated expenses) which are taken into account in 

18 determining the cost of attendance (as defined 

19 in section 472 of the Higher Education Act of 

20 1965, as in effect on the date of the enactment 

21 of the Promoting Access and Retention 

22 Through New Efforts to Require Shared High23 er Investments in Postsecondary Success Act) 

24 of such individual at an eligible educational in25 stitution for the academic period for which the 


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•S 2191 IS

1 credit under subsection (a) is being deter2 mined.’’. 

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

4 this section shall apply to taxable years beginning after 

5 December 31, 2015. 

6 SEC. 206. MODIFICATIONS TO QUALIFIED TUITION PRO7 GRAMS. 

8 (a) ELIMINATION OF DISTRIBUTION AGGREGATION

9 REQUIREMENTS.— 

10 (1) IN GENERAL.—Section 529(c)(3) of the In11 ternal Revenue Code of 1986 is amended by striking 

12 subparagraph (D). 

13 (2) EFFECTIVE DATE.—The amendment made 

14 by this subsection shall apply to distributions after 

15 December 31, 2015. 

16 (b) RECONTRIBUTION OF REFUNDED AMOUNTS.— 

17 (1) IN GENERAL.—Section 529(c)(3) of the In18 ternal Revenue Code of 1986, as amended by sub19 section (a), is amended by adding at the end the fol20 lowing new subparagraph: 

21 ‘‘(D) SPECIAL RULE FOR CONTRIBUTIONS

22 OF REFUNDED AMOUNTS.—In the case of a 

23 beneficiary who receives a refund of any quali24 fied higher education expenses from an eligible 

25 educational institution, subparagraph (A) shall 


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•S 2191 IS

1 not apply to that portion of any distribution for 

2 the taxable year which is recontributed to a 

3 qualified tuition program of which such indi4 vidual is a beneficiary, but only to the extent 

5 such recontribution is made not later than 60 

6 days after the date of such refund and does not 

7 exceed the refunded amount.’’. 

8 (2) EFFECTIVE DATE.— 

9 (A) IN GENERAL.—The amendment made 

10 by this subsection shall apply with respect to 

11 refunds of qualified higher education expenses 

12 after December 31, 2015. 

13 (B) TRANSITION RULE.—In the case of a 

14 refund of qualified higher education expenses 

15 received after December 31, 2015, and before 

16 the date of the enactment of this Act (if later), 

17 section 529(c)(3)(D) of the Internal Revenue 

18 Code of 1986 (as added by this section) shall 

19 be applied by substituting ‘‘not later than 60 

20 days after the date of the enactment of this 

21 subparagraph’’ for ‘‘not later than 60 days 

22 after the date of such refund’’. 

Æ 


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