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[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 2191 Introduced in Senate (IS)]

<DOC>

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Promoting Access and Retention 
Through New Efforts to Require Shared Higher Investments in 
Postsecondary Success Act'' or the ``PARTNERSHIPS Act''.

      TITLE I--STATE-FEDERAL COLLEGE AFFORDABILITY AND COMPLETION 
                              PARTNERSHIPS

SEC. 101. STATE-FEDERAL COLLEGE AFFORDABILITY AND COMPLETION 
              PARTNERSHIPS.

    Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et 
seq.) is amended by adding at the end the following:

     ``PART J--STATE-FEDERAL COLLEGE AFFORDABILITY AND COMPLETION 
                              PARTNERSHIPS

``SEC. 499-1. PURPOSE.

    ``The purpose of this part is to establish a State-Federal 
partnership that incentivizes State investment in public higher 
education.

``SEC. 499-2. DEFINITIONS.

    ``In this part:
            ``(1) Eligible state.--The term `eligible State' means a 
        State that provides, to public institutions of higher 
        education, net State operating support per FTE student in an 
        amount equal to not less than 50 percent of the amount that 
        reflects the maximum Federal Pell Grant award amount for the 
        most recent academic year.
            ``(2) Full-time equivalent student number.--The term `full-
        time equivalent student number' means a number reflecting the 
        number of students enrolled full-time at a public institution 
        of higher education in the State, and shall be defined and 
        calculated in the manner determined most appropriate by the 
        Secretary.
            ``(3) Low-income student.--The term `low-income student' 
        means a student who is eligible for a Federal Pell Grant under 
        section 401.
            ``(4) Net state operating support.--The term `net State 
        operating support' means an amount that is equal to the amount 
        of State funds and local government appropriations used to 
        support public higher education annual operating expenses in 
        the State, calculated in accordance with subparagraphs (A) and 
        (B).
                    ``(A) Calculation.--A State's net State operating 
                support shall, for a fiscal year, be an amount that is 
                equal to the difference resulting from the gross amount 
                of State funds appropriated and disbursed by the State 
                and expended by the recipient institutions in the 
                fiscal year for public higher education operating 
                expenses in the State, minus--
                            ``(i) such appropriations that are returned 
                        to the State;
                            ``(ii) State-appropriated funds derived 
                        from Federal sources, including funds provided 
                        under this part;
                            ``(iii) local government funds not 
                        appropriated for operating support for public 
                        higher education;
                            ``(iv) amounts that are portions of multi-
                        year appropriations to be distributed over 
                        multiple years that are not to be spent for the 
                        year for which the calculation is being made;
                            ``(v) tuition charges remitted to the State 
                        to offset State appropriations;
                            ``(vi) State funding for students in non-
                        credit continuing or adult education courses 
                        and non-credit extension courses;
                            ``(vii) sums appropriated to private 
                        nonprofit institutions of higher education, or 
                        to proprietary institutions of higher 
                        education, for capital outlay or operating 
                        expenses; and
                            ``(viii) any other funds excluded under 
                        subparagraph (B).
                    ``(B) Exclusions.--Net State operating support does 
                not include--
                            ``(i) funds for--
                                    ``(I) student aid programs that 
                                provide grants to students attending 
                                in-State private nonprofit institutions 
                                of higher education, in-State 
                                proprietary institutions of higher 
                                education, independent institutions, 
                                in-State public institutions, and out-
                                of-State institutions;
                                    ``(II) capital outlay;
                                    ``(III) deferred maintenance; or
                                    ``(IV) research and development; or
                            ``(ii) any other funds that the Secretary 
                        may exclude.
            ``(5) Net state operating support per fte student.--The 
        term `net State operating support per FTE student' means, for a 
        fiscal year--
                    ``(A) the net State operating support for the 
                previous fiscal year; divided by
                    ``(B) the full-time equivalent student number for 
                the previous fiscal year.
            ``(6) Public institution.--The term `public institution' 
        means an institution of higher education (as defined in section 
        101) whose liabilities are backed by the full faith and credit 
        of the State or its equivalent, as determined in accordance 
        with section 668.15 of title 34, Code of Federal Regulations, 
        or any successor regulation.
            ``(7) Private nonprofit institution of higher education.--
        The term `private nonprofit institution of higher education' 
        means an institution of higher education, as defined in section 
        102, that is a private nonprofit institution.
            ``(8) Proprietary institution of higher education.--The 
        term `proprietary institution of higher education' has the 
        meaning given the term in section 102(b).

``SEC. 499-3. AUTHORIZATION; USE OF FUNDS.

    ``(a) Authorization.--The Secretary shall award annual block grants 
to eligible States to encourage States to provide additional funding 
for public higher education.
    ``(b) Use of Funds by States.--An eligible State receiving a block 
grant under this part shall allocate 100 percent of block grant funding 
to public institutions for public higher education expenditures in 
accordance with subsection (c).
    ``(c) Use of Funds by Public Institutions.--A public institution 
that receives funds under this part shall--
            ``(1) use a portion of such funds to directly reduce 
        tuition costs or mitigate the need to raise tuition and fees 
        for students residing in the State;
            ``(2) use a portion of such funds to support the enrollment 
        of low-income students in the institution;
            ``(3) use a portion of such funds to support retention and 
        degree completion of low-income students; and
            ``(4) create a publicly available report that documents the 
        institution's efforts to satisfy the requirements described in 
        paragraphs (1) through (3).
    ``(d) Prohibitions.--
            ``(1) No use for endowments.--A public institution may not 
        use funds received under this part to increase the endowment of 
        the public institution.
            ``(2) No use for athletic or commercial venues.--No funds 
        awarded under this part may be used for the modernization, 
        renovation, or repair of stadiums or other facilities of a 
        public institution primarily used for athletic contests or 
        events for which admission is charged to the general public.
    ``(e) State Limitations on Institutions.--Nothing in this section 
shall be construed to prohibit a State from establishing additional 
requirements for public institutions in the State for the purpose of 
increasing the affordability of higher education.

``SEC. 499-4. GRANT FORMULA.

    ``(a) Grant Formula.--The Secretary shall award a block grant to an 
eligible State for a fiscal year in an amount equal to the product of--
            ``(1) the marginal Federal match amount for the fiscal 
        year, as determined under subsection (b); multiplied by
            ``(2) the full-time equivalent student number for the 
        previous fiscal year.
    ``(b) Federal Match Amount for Eligible States.--The marginal 
Federal match amount shall be the following:
            ``(1) Eligible states with net state operating support per 
        fte student between 50 percent and 130 percent of the maximum 
        federal pell grant.--The marginal Federal match amount for an 
        eligible State with a net State operating support per FTE 
        student for the fiscal year that is equal to or more than 50 
        percent of the amount of the maximum Federal Pell Grant under 
        section 401 for the most recent fiscal year but is less than 
        130 percent of such amount, shall be equal to the product of--
                    ``(A) the amount of the maximum Federal Pell Grant 
                for the most recent fiscal year; multiplied by
                    ``(B) the result of the mathematical expression 
                0.26x\2\ - 0.14x + 0.005, where x represents the ratio 
                obtained by dividing the eligible State's net State 
                operating support per FTE student by the amount of the 
                maximum Federal Pell Grant for the most recent fiscal 
                year.
            ``(2) Eligible states with net state operating support 
        equal to or greater than 130 percent of the maximum federal 
        pell grant.--The marginal Federal match amount for an eligible 
        State with a net State operating support per FTE student for 
        the fiscal year equal to or greater than 130 percent of the 
        amount of the maximum Federal Pell Grant for the most recent 
        fiscal year, shall be equal to the sum of--
                    ``(A) the amount calculated under paragraph (1) for 
                a State with a net State operating support per FTE 
                student equal to 130 percent of the amount of the 
                maximum Federal Pell Grant for the most recent fiscal 
                year; and
                    ``(B) 10 percent of the amount by which the 
                eligible State's net State operating support per FTE 
                student exceeds 130 percent of such maximum Federal 
                Pell Grant,
        except that in no case shall the marginal Federal match under 
        this paragraph exceed an amount equal to 30 percent of the 
        amount of the maximum Federal Pell Grant for the most recent 
        fiscal year.
    ``(c) Ratable Reduction.--If the sums made available under this 
part for any fiscal year are insufficient to pay the full amounts that 
all States are eligible to receive in accordance with this section for 
such year, the Secretary shall establish procedures for ratably 
reducing each State's award amount.

``SEC. 499-5. ACCOUNTABILITY AND ENFORCEMENT.

    ``(a) Annual Report.--
            ``(1) In general.--Beginning for the first fiscal year 
        after a State receives a block grant under this part, the State 
        shall prepare and submit an annual report to the Secretary, 
        which shall include detailed information about the State's use 
        of the grant funds to increase the affordability of public 
        higher education and increase the enrollment and completion 
        rates of low-income students (as measured by eligibility for a 
        Federal Pell Grant).
            ``(2) Contents.--A report described in paragraph (1) 
        shall--
                    ``(A) describe the cause of any increases in public 
                higher education costs and the sources of new funding 
                to address such increases;
                    ``(B) describe all actions taken to incentivize 
                public institutions to reduce tuition costs, or 
                mitigate the need to raise tuition and fees for in-
                State students;
                    ``(C) explain the extent to which public 
                institutions supported the enrollment of low-income 
                students who are eligible for Federal Pell Grants or 
                other need-based financial assistance;
                    ``(D) disclose how the State distributed the 
                allotment provided under this part to all public 
                institutions, and the rationale for such distribution;
                    ``(E) include the aggregated graduation rates for 
                low-income students (based on eligibility for Federal 
                Pell Grants), part-time students, and transfer 
                students, disaggregated by type of degree or 
                credential;
                    ``(F) detail State efforts to improve the retention 
                and graduation rates of low-income students at both 2-
                year and 4-year institutions of higher education; and
                    ``(G) be publicly available in a manner that is 
                easily accessible to parents, students, and consumer 
                advocates.
    ``(b) Maintaining Net State Operating Support Per FTE Student.--
            ``(1) In general.--Each State receiving an allotment under 
        this part for a fiscal year shall--
                    ``(A) ensure that the amount expended by the State, 
                from funds derived from non-Federal sources, for net 
                State operating support per FTE student for the 
                preceding fiscal year was not less than the amount 
                expended by the State for net State operating support 
                per FTE student for the second preceding fiscal year; 
                and
                    ``(B) demonstrate the State's compliance with 
                subparagraph (A) by providing the Secretary with a 
                written assurance and detailed documentation.
            ``(2) Penalty.--If a State does not comply with paragraph 
        (1), the State's grant award under this part shall be reduced 
        by an amount equal to the product of--
                    ``(A) the difference between--
                            ``(i) the net State operating support per 
                        FTE student for the second preceding fiscal 
                        year; minus
                            ``(ii) the net State operating support per 
                        FTE student for the preceding fiscal year; 
                        multiplied by
                    ``(B) the full-time equivalent student number for 
                the previous fiscal year.
    ``(c) Maintenance of Effort for State-Based Financial Aid and 
Avoidance of Tuition Inflation.--Each State receiving an allotment 
under this part for a fiscal year shall, as a condition of receiving 
the allotment--
            ``(1) maintain the level of State student need-based 
        financial aid support provided for costs associated with 
        postsecondary education at not less than the average annual 
        level of such support provided for the 3 academic years 
        immediately preceding the year for which the State is receiving 
        the allotment; and
            ``(2) ensure that for the academic year immediately 
        following the academic year for which the State is receiving 
        the allotment, all public institutions of higher education in 
        the State will not increase tuition for in-State students by a 
        percentage greater than the estimated percentage increase in 
        the Consumer Price Index (as determined by the Secretary, using 
        the definition in section 478(f)) for the calendar year for 
        which the State is receiving the allotment.
    ``(d) Authority to Compromise.--Notwithstanding subsections (b) and 
(c), the Secretary may waive any maintenance of support and effort 
requirement described in such subsections for a State if there is a 
clear case of a significant economic downturn in the State as evidenced 
by a reduction in State domestic product, real per capita income, and 
employment. Such determination shall only be made by the Secretary 
following a written appeal by the State that documents recent and 
significant decreases in economic activity in the State.

``SEC. 499-6. AUTHORIZATION OF APPROPRIATIONS.

    ``There are authorized to be appropriated to carry out this part 
such sums as may be necessary for fiscal year 2016 and each of the five 
succeeding fiscal years.''.

                        TITLE II--TAX PROVISIONS

SEC. 201. PERMANENT EXTENSION AND MODIFICATION OF AMERICAN OPPORTUNITY 
              AND LIFETIME LEARNING CREDITS.

    (a) In General.--Section 25A of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 25A. AMERICAN OPPORTUNITY TAX CREDIT.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year, with respect to each eligible student, an amount equal to 
the sum of--
            ``(1) 100 percent of so much of the qualified tuition and 
        related expenses paid by the taxpayer during the taxable year 
        (for education furnished to the eligible student during any 
        academic period beginning in such taxable year) as does not 
        exceed $2,000, plus
            ``(2) 25 percent of so much of such expenses so paid as 
        exceeds the dollar amount in effect under paragraph (1) but 
        does not exceed twice such dollar amount.
    ``(b) Portion of Credit Refundable.--60 percent of the credit 
allowable under subsection (a) with respect to each eligible student 
(determined without regard to this subsection and section 26(a) and 
after application of all other provisions of this section) shall be 
treated as a credit allowable under subpart C (and not under this 
part). The preceding sentence shall not apply to any taxpayer for any 
taxable year if such taxpayer is a child to whom section 1(g) applies 
for such taxable year.
    ``(c) 5-Year Limitation.--No credit shall be allowed under 
subsection (a) with respect to any eligible student for any taxable 
year if such student was taken into account in determining the credit 
allowed under such subsection (by the taxpayer or any other individual) 
for any 5 prior taxable years.
    ``(d) Lifetime Learning Credit.--
            ``(1) In general.--In the case of an individual, there 
        shall be allowed as a credit against the tax imposed by this 
        chapter an amount equal to 20 percent of so much of the 
        qualified tuition and related expenses paid by the taxpayer 
        during the taxable year (for education furnished during any 
        academic period beginning in such taxable year) as does not 
        exceed $10,000.
            ``(2) Special rules for determining expenses.--
                    ``(A) Coordination with american opportunity tax 
                credit.--The qualified tuition and related expenses 
                with respect to an individual who is an eligible 
                student for whom a credit under subsection (a) is 
                allowed for the taxable year shall not be taken into 
                account under this subsection.
                    ``(B) Expenses eligible for lifetime learning 
                credit.--For purposes of paragraph (1), qualified 
                tuition and related expenses shall include expenses 
                described in subsection (f)(2) with respect to any 
                course of instruction at an eligible educational 
                institution to acquire or improve job skills of the 
                individual.
    ``(e) Limitation Based on Modified Adjusted Gross Income.--
            ``(1) In general.--The amount allowable as a credit under 
        subsection (a) or (d) for any taxable year shall be reduced 
        (but not below zero) by an amount which bears the same ratio to 
        the amount so allowable (determined without regard to this 
        subsection and subsection (b) but after application of all 
        other provisions of this section) as--
                    ``(A) the excess of--
                            ``(i) the taxpayer's modified adjusted 
                        gross income for such taxable year, over
                            ``(ii) $80,000 in the case of the credit 
                        under subsection (a), or $40,000 in the case of 
                        the credit under subsection (d), bears to
                    ``(B) $10,000.
            ``(2) Joint returns.--In the case of a joint return, each 
        of the dollar amounts in effect under paragraph (1) shall be 
        increased to twice such amount.
            ``(3) Modified adjusted gross income.--For purposes of this 
        subsection, the term `modified adjusted gross income' means the 
        adjusted gross income of the taxpayer for the taxable year 
        increased by any amount excluded from gross income under 
        section 911, 931, or 933.
            ``(4) Inflation adjustment for lifetime learning credit 
        phaseout.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2001, the $40,000 amount in paragraph 
                (1)(A)(ii) shall be increased by an amount equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2000' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $1,000, such 
                amount shall be rounded to the next lowest multiple of 
                $1,000.
    ``(f) Definitions.--For purposes of this section--
            ``(1) Eligible student.--The term `eligible student' means, 
        with respect to any academic period, a student who--
                    ``(A) meets the requirements of section 484(a)(1) 
                of the Higher Education Act of 1965 (20 U.S.C. 
                1091(a)(1)), as in effect on August 5, 1997, and
                    ``(B) is carrying at least \1/2\ the normal full-
                time work load for the course of study the student is 
                pursuing.
            ``(2) Qualified tuition and related expenses.--
                    ``(A) In general.--The term `qualified tuition and 
                related expenses' means tuition, fees, and course 
                materials, required for enrollment or attendance of--
                            ``(i) the taxpayer,
                            ``(ii) the taxpayer's spouse, or
                            ``(iii) any dependent of the taxpayer with 
                        respect to whom the taxpayer is allowed a 
                        deduction under section 151,
                at an eligible educational institution for courses of 
                instruction of such individual at such institution.
                    ``(B) Computer-related expenses included.--Except 
                as provided in subsection (g)(9), such term includes 
                expenses for the purchase of computer or peripheral 
                equipment (as defined in section 168(i)(2)(B)), 
                computer software (as defined in section 197(e)(3)(B)), 
                or Internet access and related services, if such 
                equipment, software, or services are to be used 
                primarily by the eligible student during any of the 
                years the student is enrolled at an eligible 
                educational institution.
                    ``(C) Special needs services included.--Such term 
                includes expenses for special needs services in the 
                case of a special needs beneficiary (within the meaning 
                of section 529(e)(3)(A)(ii) as in effect on the day 
                before the date of the enactment of the Promoting 
                Access and Retention Through New Efforts to Require 
                Shared Higher Investments in Postsecondary Success Act) 
                which are incurred in connection with the enrollment or 
                attendance of the student at an eligible educational 
                institution.
                    ``(D) Exception for education involving sports, 
                etc.--Such term does not include expenses with respect 
                to any course or other education involving sports, 
                games, or hobbies, unless such course or other 
                education is part of the individual's degree program.
                    ``(E) Exception for nonacademic fees.--Such term 
                does not include student activity fees, athletic fees, 
                insurance expenses, or other expenses unrelated to an 
                individual's academic course of instruction.
            ``(3) Eligible educational institution.--The term `eligible 
        educational institution' means an institution--
                    ``(A) which is described in section 481 of the 
                Higher Education Act of 1965 (20 U.S.C. 1088), as in 
                effect on August 5, 1997, and
                    ``(B) which is eligible to participate in a program 
                under title IV of such Act.
    ``(g) Special Rules.--
            ``(1) Identification requirement.--No credit shall be 
        allowed under this section to a taxpayer with respect to the 
        qualified tuition and related expenses of an individual unless 
        the taxpayer includes the name and taxpayer identification 
        number of such individual, and the employer identification 
        number of any institution to which such expenses were paid, on 
        the return of tax for the taxable year.
            ``(2) Adjustment for certain scholarships, etc.--
                    ``(A) In general.--The amount of qualified tuition 
                and related expenses otherwise taken into account under 
                subsection (a) or (d) with respect to an individual for 
                an academic period shall be reduced (before the 
                application of subsection (e)) by the sum of any 
                amounts paid for the benefit of such individual which 
                are allocable to such period as--
                            ``(i) a qualified scholarship which is 
                        excludable from gross income under section 117,
                            ``(ii) an educational assistance allowance 
                        under chapter 30, 31, 32, 34, or 35 of title 
                        38, United States Code, or under chapter 1606 
                        of title 10, United States Code, and
                            ``(iii) a payment (other than a gift, 
                        bequest, devise, or inheritance within the 
                        meaning of section 102(a)) for such 
                        individual's educational expenses, or 
                        attributable to such individual's enrollment at 
                        an eligible educational institution, which is 
                        excludable from gross income under any law of 
                        the United States.
                    ``(B) Coordination with pell grants not used for 
                qualified tuition and related expenses.--For purposes 
                of subparagraph (A), the amount of any Federal Pell 
                Grant under section 401 of the Higher Education Act of 
                1965 (20 U.S.C. 1070a) shall be reduced (but not below 
                zero) by the amount of expenses (other than qualified 
                tuition and related expenses) which are taken into 
                account in determining the cost of attendance (as 
                defined in section 472 of the Higher Education Act of 
                1965, as in effect on the date of the enactment of the 
                Promoting Access and Retention Through New Efforts to 
                Require Shared Higher Investments in Postsecondary 
                Success Act) of such individual at an eligible 
                educational institution for the academic period for 
                which the credit under subsection (a) or (d) (whichever 
                is applicable) is being determined.
            ``(3) Treatment of expenses paid by dependent.--If a 
        deduction under section 151 with respect to an individual is 
        allowed to another taxpayer for a taxable year beginning in the 
        calendar year in which such individual's taxable year begins--
                    ``(A) no credit shall be allowed under this section 
                to such individual for such individual's taxable year,
                    ``(B) qualified tuition and related expenses paid 
                by such individual during such individual's taxable 
                year shall be treated for purposes of this section as 
                paid by such other taxpayer, and
                    ``(C) a statement described in paragraph (8) and 
                received by such individual shall be treated as 
                received by the taxpayer.
            ``(4) Treatment of certain prepayments.--If qualified 
        tuition and related expenses are paid by the taxpayer during a 
        taxable year for an academic period which begins during the 
        first 3 months following such taxable year, such academic 
        period shall be treated for purposes of this section as 
        beginning during such taxable year.
            ``(5) Denial of double benefit.--No credit shall be allowed 
        under this section for any amount for which a deduction is 
        allowed under any other provision of this chapter.
            ``(6) No credit for married individuals filing separate 
        returns.--If the taxpayer is a married individual (within the 
        meaning of section 7703), this section shall apply only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(7) Nonresident aliens.--If the taxpayer is a nonresident 
        alien individual for any portion of the taxable year, this 
        section shall apply only if such individual is treated as a 
        resident alien of the United States for purposes of this 
        chapter by reason of an election under subsection (g) or (h) of 
        section 6013.
            ``(8) Payee statement requirement.--Except as otherwise 
        provided by the Secretary, no credit shall be allowed under 
        this section unless the taxpayer receives a statement furnished 
        under section 6050S(d) which contains all of the information 
        required by paragraph (2) thereof.
            ``(9) Reduced credit in case of certain students.--In the 
        case of a student who is not an eligible student for the 
        taxable year solely by reason of subparagraph (B) of subsection 
        (f)(1), the student shall be treated as an eligible student for 
        purposes of this section (other than subsection (f)(2)(B)) for 
        such taxable year except that the dollar amount in effect under 
        subsection (a)(1) shall be \1/2\ of the amount otherwise in 
        effect for such taxable year.
    ``(h) Regulations.--The Secretary may prescribe such regulations or 
other guidance as may be necessary or appropriate to carry out this 
section, including regulations providing for a recapture of the credit 
allowed under this section in cases where there is a refund in a 
subsequent taxable year of any amount which was taken into account in 
determining the amount of such credit.''.
    (b) Requirement To Report Tuition Paid Rather Than Tuition 
Billed.--Section 6050S(b)(2)(B)(i) of the Internal Revenue Code of 1986 
is amended by striking ``or the aggregate amount billed''.
    (c) Repeal of Education Savings Bonds.--
            (1) In general.--Part III of subchapter B of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by striking 
        section 135.
            (2) Table of contents.--The table of sections for part III 
        of subchapter B of chapter 1 of such Code is amended by 
        striking the item relating to section 135.
    (d) Termination of Coverdell Education Savings Accounts.--
            (1) In general.--Section 530 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(i) Termination.--Subsection (a) shall not apply to the portion 
of any Coverdell education savings account that is attributable to a 
contribution made after the later of--
            ``(1) December 31, 2015, or
            ``(2) the date of the enactment of this subsection.''.
            (2) Rollovers to qualified tuition programs.--Subsection 
        (b) of section 529 of such Code is amended by adding at the end 
        the following new paragraph:
            ``(7) Rollovers from coverdell education savings 
        accounts.--A program shall not be treated as a qualified 
        tuition program for any taxable year beginning after December 
        31, 2015, and before January 1, 2017, unless it accepts 
        (without regard to any contribution limitations otherwise 
        applicable under the program) contributions made during such 
        taxable year which are paid or distributed from a Coverdell 
        education savings account for the benefit of the same 
        designated beneficiary as such program or a member of the 
        family of such beneficiary.''.
    (e) Conforming Amendments.--
            (1) Section 62(d)(2) of such Code is amended by striking 
        ``135,''.
            (2) Sections 86(b)(2)(A), 137(b)(3)(B), 199(d)(2)(A), 
        219(g)(3)(A)(ii), and 221(b)(2)(C)(ii) of such Code are each 
        amended by striking ``135,''.
            (3) Section 221(d) of such Code is amended--
                    (A) by striking ``25A(f)(2)'' in paragraph (2) and 
                inserting ``25A(f)(3)'', and
                    (B) by striking ``25A(b)(3)'' in paragraph (3) and 
                inserting ``25A(f)(1)''.
            (4) Section 222 of such Code is amended--
                    (A) by striking ``elects to have section 25A 
                apply'' in subsection (c)(2)(A) and inserting ``claims 
                the credit under section 25A'',
                    (B) by striking ``if credit elected'' in the 
                heading of subparagraph (A) of subsection (c)(2) and 
                inserting ``for 25a expenses'',
                    (C) by striking ``135,'' in subsection (c)(2)(B), 
                and
                    (D) by striking ``25A(f)'' in subsection (d)(1) and 
                inserting ``25A(f)(2)''.
            (5) Section 469(i)(3)(F)(ii) of such Code is amended by 
        striking ``sections 135 and 137'' and inserting ``section 
        137''.
            (6) Section 530(d)(2)(C) of such Code is amended by 
        striking ``Hope and lifetime learning credits'' in the heading 
        and inserting ``American opportunity tax credit''.
            (7) Section 6103(l)(20)(A)(iv) is amended by striking 
        ``sections 135 and 911'' and inserting ``section 911''.
            (8) Section 6211(b)(4)(A) of such Code is amended by 
        striking ``subsection (i)(6)'' and inserting ``subsection 
        (b)''.
            (9) Section 6213(g)(2)(J) of such Code is amended by 
        striking ``TIN required under section 25A(g)(1)'' and inserting 
        ``TIN or employer identification number required under section 
        25A(g)(1)''.
            (10) Section 1004(c) of division B of the American Recovery 
        and Reinvestment Tax Act of 2009 is amended--
                    (A) in paragraph (1)--
                            (i) by striking ``section 25A(i)(6)'' each 
                        place it appears and inserting ``section 
                        25A(b)'',
                            (ii) by striking ``with respect to taxable 
                        years beginning after 2008 and before 2018'' in 
                        subparagraph (A) and inserting ``with respect 
                        to each taxable year'', and
                            (iii) by striking ``for taxable years 
                        beginning after 2008 and before 2018'' in 
                        subparagraph (B) and inserting ``for each 
                        taxable year'',
                    (B) in paragraph (2), by striking ``Section 
                25A(i)(6)'' and inserting ``Section 25A(b)'', and
                    (C) in paragraph (3)(C), by striking ``subsection 
                (i)(6)'' and inserting ``subsection (b)''.
            (11) The table of sections for subpart A of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by striking the item relating to section 25A and 
        inserting the following new item:

``Sec. 25A. American opportunity tax credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 202. EXPANSION OF EXCLUSION FOR EDUCATIONAL ASSISTANCE PROGRAMS.

    (a) In General.--Paragraph (2) of section 127(a) of the Internal 
Revenue Code of 1986 is amended--
            (1) by striking ``$5,250'' in the heading and inserting 
        ``$10,500'', and
            (2) by striking ``$5,250'' both places it appears and 
        inserting ``$10,500''.
    (b) Expenses of Employee's Spouse and Dependents.--Paragraph (2) of 
section 127(c) of the Internal Revenue Code of 1986 is amended by 
striking ``includes'' and all that follows and inserting ``includes, 
for any year--
                    ``(A) an individual who is an employee within the 
                meaning of section 401(c)(1) (relating to self-employed 
                individuals), and
                    ``(B) any spouse or dependent of an employee.''.
    (c) Employer-Provided Educational Loan Repayment Assistance.--
            (1) In general.--Paragraph (1) of section 127(c) of the 
        Internal Revenue Code of 1986 is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (A),
                    (B) by striking the comma at the end of 
                subparagraph (B) and inserting ``, and'', and
                    (C) by inserting after subparagraph (B) the 
                following new subparagraph:
                    ``(C) the payment by an employer of any portion of 
                the indebtedness of an employee pursuant to a student 
                loan of the employee,''.
            (2) Student loan.--Section 127(c) of such Code is amended--
                    (A) by redesignating paragraphs (4), (5), (6), and 
                (7) as paragraphs (5), (6), (7), and (8), respectively, 
                and
                    (B) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) Student loan.--The term `student loan' means any loan 
        to an individual to assist the individual in attending an 
        educational organization described in section 
        170(b)(1)(A)(ii).''.
            (3) Conforming amendment; denial of double benefit.--
        Paragraph (1) of section 221(e) of such Code is amended by 
        inserting before the period the following: ``, or for which an 
        exclusion is allowable under section 127 to the taxpayer's 
        employer by reason of the payment by such employer of any 
        indebtedness on a student loan of the taxpayer''.
    (d) Effective Date.--The amendments made by this section shall 
apply to expenses paid or incurred and loan payments made in taxable 
years beginning after December 31, 2015.

SEC. 203. EXCLUSION OF CERTAIN STUDENT LOAN REPAYMENTS AND LOAN 
              FORGIVENESS.

    (a) In General.--Paragraph (1) of section 108(f) of the Internal 
Revenue Code of 1986 is amended by striking ``(in whole or in part)'' 
and all that follows and inserting ``(in whole or in part) or, in the 
case of paragraph (3), the repayment of any student loan if such 
discharge or repayment meets the requirements of paragraph (2), (3), or 
(4).''.
    (b) Public Interest Student Loans.--Paragraph (2) of section 108(f) 
of the Internal Revenue Code of 1986 is amended to read as follows:
            ``(2) Certain public interest student loans.--
                    ``(A) In general.--A discharge meets the 
                requirements of this paragraph if it is made pursuant 
                to a provision of a student loan described in 
                subparagraph (B) under which all or part of the 
                indebtedness of an individual would be discharged if 
                the individual worked for a certain period of time in 
                certain professions for any of a broad class of 
                employers.
                    ``(B) Limitation.--A student loan is described in 
                this subparagraph if such loan is made--
                            ``(i) by the United States, or an 
                        instrumentality or agency thereof,
                            ``(ii) by a State, territory, or possession 
                        of the United States, or the District of 
                        Columbia, or any political subdivision thereof,
                            ``(iii) by a public benefit corporation--
                                    ``(I) which is exempt from taxation 
                                under section 501(c)(3),
                                    ``(II) which has assumed control 
                                over a State, county, or municipal 
                                hospital, and
                                    ``(III) whose employees have been 
                                deemed to be public employees under 
                                State law,
                            ``(iv) by any educational organization 
                        described in section 170(b)(1)(A)(ii)--
                                    ``(I) pursuant to an agreement with 
                                any entity described in clause (i), 
                                (ii), or (iii) under which the funds 
                                from which the loan was made were 
                                provided to such educational 
                                organization, or
                                    ``(II) pursuant to a program of 
                                such educational organization which is 
                                designed to encourage its students to 
                                serve in occupations with unmet needs 
                                or in areas with unmet needs and under 
                                which the services provided by the 
                                students (or former students) are for 
                                or under the direction of a 
                                governmental unit or an organization 
                                described in section 501(c)(3) and 
                                exempt from tax under section 501(a), 
                                or
                            ``(v) by an educational organization 
                        described in section 170(b)(1)(A)(ii) or an 
                        organization exempt from tax under section 
                        501(a)--
                                    ``(I) to refinance a loan that 
                                meets the requirements of clause (i), 
                                (ii), (iii), or (iv), or
                                    ``(II) to refinance a loan to an 
                                individual to assist the individual in 
                                attending any such educational 
                                organization, but only if the 
                                refinancing loan is pursuant to a 
                                program of the refinancing organization 
                                which is designed as described in 
                                clause (iv)(II).
                    ``(C) Exception for discharges on account of 
                services performed for certain lenders.--A discharge of 
                a loan made by an organization described in 
                subparagraph (B)(iv) does not meet the requirements of 
                this paragraph if the discharge is on account of 
                services performed for either such organization.''.
    (c) Institution-Provided Loan Repayments.--Paragraph (3) of section 
108(f) of the Internal Revenue Code of 1986 is amended to read as 
follows:
            ``(3) Institution-provided loan repayments.--A repayment 
        meets the requirements of this paragraph if--
                    ``(A) it is made by an organization described in 
                section 501(c)(3) that is exempt from tax under section 
                501(a),
                    ``(B) it is made pursuant to a program that repays 
                all or a portion of the student loans of individuals on 
                the condition that at the time of the repayment the 
                individuals are working for or under the direction of a 
                governmental unit or an organization described in 
                section 501(c)(3) and exempt from tax under section 
                501(a), and
                    ``(C) it is not made on account of services 
                performed for the organization described in 
                subparagraph (A).''.
    (d) Certain Other Student Loan Forgiveness.--Subsection (f) of 
section 108 of the Internal Revenue Code of 1986 is amended--
            (1) by redesignating paragraph (4) as paragraph (5), and
            (2) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) Certain other student loan forgiveness.--A discharge 
        meets the requirements of this paragraph if it is made--
                    ``(A) in the case of a loan made by the United 
                States or an instrumentality or agency thereof, 
                pursuant to--
                            ``(i) an income-based repayment plan under 
                        section 493C of the Higher Education Act of 
                        1965, or
                            ``(ii) an income contingent repayment plan 
                        in accordance with section 455 of such Act, or
                    ``(B) because of the death or disability of the 
                student.''.
    (e) Student Loan.--Subsection (f) of section 108 of the Internal 
Revenue Code of 1986, as amended by subsection (d), is amended--
            (1) by redesignating paragraph (5) as paragraph (6), and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) Student loan.--For purposes of this subsection, the 
        term `student loan' means any loan to an individual to assist 
        the individual in attending an educational organization 
        described in section 170(b)(1)(A)(ii).''.
    (f) Conforming Amendments.--
            (1) Section 127(c)(4) of the Internal Revenue Code of 1986, 
        as added by this Act, is amended by striking ``means any loan'' 
        and all that follows and inserting ``has the meaning given such 
        term by section 108(f)(5).''.
            (2) Sections 3121(a)(20), 3231(e)(5), 3306(b)(16), and 
        3401(a)(19) of such Code are each amended by striking 
        ``108(f)(4)'' and inserting ``108(f)(6)''.
    (g) Effective Date.--The amendments made by this section shall 
apply to discharges of indebtedness after December 31, 2015.

SEC. 204. UNIFORM DEFINITION OF QUALIFYING EDUCATION EXPENSES.

    (a) Educational Assistance Programs.--Paragraph (1) of section 
127(c) of the Internal Revenue Code of 1986 is amended--
            (1) by striking ``(including, but not limited to, tuition, 
        fees, and similar payments, books, supplies, and equipment)'' 
        in subparagraph (A) and inserting ``(including qualified 
        tuition and related expenses, as defined in section 
        25A(f)(2))'', and
            (2) by striking the second sentence.
    (b) Qualified Scholarships.--Paragraph (2) of section 117(b) of the 
Internal Revenue Code of 1986 is amended by striking ``means--'' and 
all that follows and inserting ``has the meaning given such term by 
section 25A(f)(2).''.
    (c) Qualified Tuition Programs.--
            (1) Computer technology and equipment allowed as a 
        qualified higher education expense for years before 2018.--
                    (A) In general.--Clause (iii) of section 
                529(e)(3)(A) of the Internal Revenue Code of 1986 is 
                amended to read as follows:
                            ``(iii) expenses for the purchase of 
                        computer or peripheral equipment (as defined in 
                        section 168(i)(2)(B)), computer software (as 
                        defined in section 197(e)(3)(B)), or Internet 
                        access and related services, if such equipment, 
                        software, or services are to be used primarily 
                        by the beneficiary during any of the years the 
                        beneficiary is enrolled at an eligible 
                        educational institution.''.
                    (B) Effective date.--The amendment made by this 
                paragraph shall apply to taxable years beginning after 
                December 31, 2015.
            (2) Permanent definition.--Paragraph (3) of section 529(e) 
        of such Code, as amended by paragraph (1), is amended--
                    (A) by striking subparagraph (A) and inserting the 
                following new subparagraph:
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified higher education 
                expenses' has the same meaning as the term `qualified 
                tuition and related expenses' as defined in section 
                25A(f)(2).'',
                    (B) by striking ``section 25A(b)(3)'' in clause (i) 
                of subparagraph (B) and inserting ``section 25A(f)(1) 
                (not including any individual treated as an eligible 
                student solely by reason of section 25A(g)(9))'', and
                    (C) by striking ``such institution'' in clause (i) 
                of subparagraph (B) and inserting ``an eligible 
                educational institution''.
    (d) Technical Amendment.--Clause (iii) of section 530(b)(3)(A) of 
the Internal Revenue Code of 1986 is amended by striking ``(as defined 
in section 170(e)(6)(F)(i)) or'' and inserting ``described in section 
25A(f)(2)(B) or any''.
    (e) Repeal of Deadwood.--
            (1) In general.--Part II of subchapter Y of chapter 1 of 
        the Internal Revenue Code of 1986 is amended by striking 
        section 1400O.
            (2) Clerical amendment.--The table of sections for part II 
        of subchapter Y of chapter 1 of such Code is amended by 
        striking the item relating to section 1400O.
    (f) Effective Date.--Except as provided in subsection (d)(1)(B), 
the amendments made by this section shall apply to taxable years 
beginning after December 31, 2017.

SEC. 205. EXPANSION OF PELL GRANT EXCLUSION FROM GROSS INCOME; 
              TREATMENT UNDER HOPE SCHOLARSHIP AND LIFETIME LEARNING 
              CREDITS.

    (a) In General.--Paragraph (1) of section 117(b) of the Internal 
Revenue Code of 1986 is amended by striking ``received by an 
individual'' and all that follows and inserting ``received by an 
individual--
                    ``(A) as a scholarship or fellowship grant to the 
                extent the individual establishes that, in accordance 
                with the conditions of the grant, such amount was used 
                for qualified tuition and related expenses, or
                    ``(B) as a Federal Pell Grant under section 401 of 
                the Higher Education Act of 1965 (as in effect on the 
                date of the enactment of this subparagraph).''.
    (b) Coordination With Hope Scholarship and Lifetime Learning 
Credits.--Paragraph (2) of section 25A(g) of the Internal Revenue Code 
of 1986 is amended--
            (1) by redesignating subparagraphs (A), (B), and (C) as 
        clauses (i), (ii), and (iii), respectively, and by moving such 
        clauses 2 ems to the right,
            (2) by striking ``etc.--The amount'' and inserting ``etc.--
                    ``(A) In general.--The amount'', and
            (3) by adding at the end the following new subparagraph:
                    ``(B) Coordination with pell grants not used for 
                qualified tuition and related expenses.--For purposes 
                of subparagraph (A), the amount of any Federal Pell 
                Grant under section 401 of the Higher Education Act of 
                1965 (20 U.S.C. 1070a) shall be reduced (but not below 
                zero) by the amount of expenses (other than qualified 
                tuition and related expenses) which are taken into 
                account in determining the cost of attendance (as 
                defined in section 472 of the Higher Education Act of 
                1965, as in effect on the date of the enactment of the 
                Promoting Access and Retention Through New Efforts to 
                Require Shared Higher Investments in Postsecondary 
                Success Act) of such individual at an eligible 
                educational institution for the academic period for 
                which the credit under subsection (a) is being 
                determined.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 206. MODIFICATIONS TO QUALIFIED TUITION PROGRAMS.

    (a) Elimination of Distribution Aggregation Requirements.--
            (1) In general.--Section 529(c)(3) of the Internal Revenue 
        Code of 1986 is amended by striking subparagraph (D).
            (2) Effective date.--The amendment made by this subsection 
        shall apply to distributions after December 31, 2015.
    (b) Recontribution of Refunded Amounts.--
            (1) In general.--Section 529(c)(3) of the Internal Revenue 
        Code of 1986, as amended by subsection (a), is amended by 
        adding at the end the following new subparagraph:
                    ``(D) Special rule for contributions of refunded 
                amounts.--In the case of a beneficiary who receives a 
                refund of any qualified higher education expenses from 
                an eligible educational institution, subparagraph (A) 
                shall not apply to that portion of any distribution for 
                the taxable year which is recontributed to a qualified 
                tuition program of which such individual is a 
                beneficiary, but only to the extent such recontribution 
                is made not later than 60 days after the date of such 
                refund and does not exceed the refunded amount.''.
            (2) Effective date.--
                    (A) In general.--The amendment made by this 
                subsection shall apply with respect to refunds of 
                qualified higher education expenses after December 31, 
                2015.
                    (B) Transition rule.--In the case of a refund of 
                qualified higher education expenses received after 
                December 31, 2015, and before the date of the enactment 
                of this Act (if later), section 529(c)(3)(D) of the 
                Internal Revenue Code of 1986 (as added by this 
                section) shall be applied by substituting ``not later 
                than 60 days after the date of the enactment of this 
                subparagraph'' for ``not later than 60 days after the 
                date of such refund''.
                                 <all>
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