II 

110TH CONGRESS 

1ST SESSION S. 1501 

To amend the Internal Revenue Code of 1986 to consolidate the current 

education tax incentives into one credit against income tax for higher 

education expenses, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 24, 2007 

Mr. BAYH introduced the following bill; which was read twice and referred to 

the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to consolidate 

the current education tax incentives into one credit 

against income tax for higher education expenses, and 

for other purposes. 

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 ‘‘Universal Higher Edu5 cation and Lifetime Learning Act of 2007’’. 


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1 SEC. 2. CONSOLIDATION OF EDUCATION TAX INCENTIVES 

2 INTO HIGHER EDUCATION TAX CREDIT. 

3 (a) IN GENERAL.—Section 25A of the Internal Rev4 enue Code of 1986 (relating to Hope and Lifetime Learn5 ing credits) is amended to read as follows: 

6 ‘‘SEC. 25A. HIGHER EDUCATION TAX CREDIT. 

7 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of any 

8 eligible student for whom an election is in effect under 

9 this section for any taxable year, there shall be allowed 

10 as a credit against the tax imposed by this chapter for 

11 the taxable year an amount equal to the sum of— 

12 ‘‘(1) 50 percent of so much of the higher edu13 cation expenses paid by the taxpayer during the tax14 able year (with respect to attendance of the eligible 

15 student at an eligible educational institution during 

16 any academic period beginning in such taxable year) 

17 as does not exceed $3,000, and 

18 ‘‘(2) 30 percent of so much of such expenses as 

19 exceeds $3,000, but does not exceed $8,000. 

20 ‘‘(b) LIMITATIONS.— 

21 ‘‘(1) HIGHER EDUCATION EXPENSE LIMITA22 TION.—The amount of higher education expenses 

23 taken into account under subsection (a) with respect 

24 to an individual for an academic period shall not ex25 ceed the individual’s cost of attendance (as defined 

26 in section 472 of the Higher Education Act of 1965, 


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1 as in effect on the date of the enactment of this sec2 tion) for such period at the eligible educational insti3 tution with respect to which such higher education 

4 expenses were paid. 

5 ‘‘(2) LIFETIME CREDIT LIMITATION.—The 

6 amount of the credit allowed under subsection (a) 

7 for any taxable year with respect to any eligible stu8 dent shall not exceed the excess of— 

9 ‘‘(A) $12,000, over 

10 ‘‘(B) the aggregate credit allowed under 

11 subsection (a) with respect to such eligible stu12 dent for all prior taxable years. 

13 ‘‘(3) CREDIT LIMITATION BASED ON MODIFIED

14 ADJUSTED GROSS INCOME.— 

15 ‘‘(A) IN GENERAL.—The amount which 

16 would (but for this paragraph) be taken into ac17 count under subsection (a) for the taxable year 

18 shall be reduced (but not below zero) by the 

19 amount determined under subparagraph (B). 

20 ‘‘(B) AMOUNT OF REDUCTION.—The 

21 amount determined under this subparagraph is 

22 the amount which bears the same ratio to the 

23 amount which would be so taken into account 

24 as— 

25 ‘‘(i) the excess of— 


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1 ‘‘(I) the taxpayer’s modified ad2 justed gross income for such taxable 

3 year, over 

4 ‘‘(II) the applicable amount 

5 under subparagraph (D), bears to 

6 ‘‘(ii) $30,000 ($60,000 in the case of 

7 a joint return). 

8 ‘‘(C) MODIFIED ADJUSTED GROSS IN9 COME.—The term ‘modified adjusted gross in10 come’ means the adjusted gross income of the 

11 taxpayer for the taxable year increased by any 

12 amount excluded from gross income under sec13 tion 911, 931, or 933. 

14 ‘‘(D) APPLICABLE AMOUNT.—The applica15 ble amount under this subparagraph is— 

16 ‘‘(i) in the case of a joint return, 200 

17 percent of the dollar amount in effect 

18 under clause (ii) for the taxable year, and 

19 ‘‘(ii) in any other case, $50,000. 

20 ‘‘(4) LIMITATION BASED ON AMOUNT OF

21 TAX.—In the case of a taxable year to which section 

22 26(a)(2) does not apply, the credit allowed under 

23 subsection (a) for the taxable year shall not exceed 

24 the excess of— 


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1 ‘‘(A) the sum of the regular tax liability 

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over 

4 ‘‘(B) the sum of the credits allowable 

5 under this subpart (other than this section and 

6 section 23) and section 27 for the taxable year. 

7 ‘‘(c) DEFINITIONS.—For purposes of this sub8 section— 

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

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

11 any individual who meets the requirements of section 

12 484(a)(1) of the Higher Education Act of 1965 (20 

13 U.S.C. 1091(a)(1)), as in effect on the date of the 

14 enactment of the Taxpayer Relief Act of 1997. 

15 ‘‘(2) HIGHER EDUCATION EXPENSE.—The term 

16 ‘higher education expense’ means any expense of a 

17 type which is taken into account in determining the 

18 cost of attendance (as defined in section 472 of the 

19 Higher Education Act of 1965, as in effect on the 

20 date of the enactment of this section) of— 

21 ‘‘(A) the taxpayer, 

22 ‘‘(B) the taxpayer’s spouse, or 

23 ‘‘(C) any dependent of the taxpayer with 

24 respect to whom the taxpayer is allowed a de25 duction under section 151, 


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1 at an eligible educational institution with respect to 

2 the attendance of such individual at such institution 

3 for the academic period for which the credit under 

4 this section is being determined. 

5 ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 

6 The term ‘eligible educational institution’ means an 

7 institution— 

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

9 the Higher Education Act of 1965, as in effect 

10 on the date of the enactment of the Taxpayer 

11 Relief Act of 1997, and 

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

13 program under title IV of the Higher Education 

14 Act of 1965. 

15 ‘‘(d) SPECIAL RULES.— 

16 ‘‘(1) IDENTIFICATION REQUIREMENT.—No 

17 credit shall be allowed under subsection (a) to a tax18 payer with respect to an eligible student unless the 

19 taxpayer includes the name and taxpayer identifica20 tion number of such student on the return of tax for 

21 the taxable year. 

22 ‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLAR23 SHIPS.—The amount of higher education expenses 

24 otherwise taken into account under subsection (a) 

25 with respect to an individual for an academic period 


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1 shall be reduced (before the application of sub2 sections (a) and (b)) by the sum of any amounts 

3 paid for the benefit of such individual which are allo4 cable to such period as— 

5 ‘‘(A) a qualified scholarship which is ex6 cludable from gross income under section 117, 

7 ‘‘(B) an educational assistance allowance 

8 under chapter 30, 31, 32, 34, or 35 of title 38, 

9 United States Code, or under chapter 1606 of 

10 title 10, United States Code, and 

11 ‘‘(C) a payment (other than a gift, be12 quest, devise, or inheritance within the meaning 

13 of section 102(a)) for such student’s edu14 cational expenses, or attributable to such indi15 vidual’s enrollment at an eligible educational in16 stitution, which is excludable from gross income 

17 under any law of the United States. 

18 ‘‘(3) CREDIT ALLOWED ONLY FOR FIRST 2

19 YEARS OF GRADUATE EDUCATION.—No credit shall 

20 be allowed under subsection (a) for a taxable year 

21 with respect to the higher education expenses of an 

22 eligible student if the student has completed (before 

23 the beginning of such taxable year) 2 years of grad24 uate education at one or more eligible educational 

25 institutions. 


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1 ‘‘(4) TREATMENT OF EXPENSES PAID BY DE2 PENDENT.—If a deduction under section 151 with 

3 respect to an individual is allowed to another tax4 payer for a taxable year beginning in the calendar 

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

6 ‘‘(A) no credit shall be allowed under sub7 section (a) to such individual for such individ8 ual’s taxable year, and 

9 ‘‘(B) higher education expenses paid by 

10 such individual during such individual’s taxable 

11 year shall be treated for purposes of this section 

12 as paid by such other taxpayer. 

13 ‘‘(5) TREATMENT OF CERTAIN PREPAY14 MENTS.—If higher education expenses are paid by 

15 the taxpayer during a taxable year for an academic 

16 period which begins during the first 3 months fol17 lowing such taxable year, such academic period shall 

18 be treated for purposes of this section as beginning 

19 during such taxable year. 

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

21 shall be allowed under this section for any expense 

22 for which deduction is allowed under any other pro23 vision of this chapter. 

24 ‘‘(7) NO CREDIT FOR MARRIED INDIVIDUALS

25 FILING SEPARATE RETURNS.—If the taxpayer is a 


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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 ‘‘(8) 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 ‘‘(e) PORTION OF CREDIT REFUNDABLE.—The ag12 gregate credits allowed to a taxpayer under subpart C 

13 shall be increased by 50 percent of the portion of the 

14 amount of the credit which would be allowed to the tax15 payer under this section without regard to this subsection 

16 and the limitation under section 26(a)(2) or subsection 

17 (b)(4), as the case may be. The amount of the credit al18 lowed under this subsection shall not be treated as a credit 

19 allowed under this subpart and shall reduce the amount 

20 of credit otherwise allowable under subsection (a) without 

21 regard to section 26(a)(2) or subsection (b)(3), as the case 

22 may be. 

23 ‘‘(f) ELECTION NOT TO HAVE SECTION APPLY.—A 

24 taxpayer may elect not to have this section apply with reVerDate Aug 31 2005 20:32 May 27, 2007 Jkt 059196 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1501.IS S1501

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1 spect to the higher education expenses of an individual for 

2 any taxable year. 

3 ‘‘(g) INFLATION ADJUSTMENT.— 

4 ‘‘(1) IN GENERAL.—In the case of a taxable 

5 year beginning after 2008, the $50,000 amount in 

6 subsection (b)(3)(D) shall each be increased by an 

7 amount equal to— 

8 ‘‘(A) such dollar amount, multiplied by 

9 ‘‘(B) the cost-of-living adjustment deter10 mined under section 1(f)(3) for the calendar 

11 year in which the taxable year begins, deter12 mined by substituting ‘calendar year 2007’ for 

13 ‘calendar year 1992’ in subparagraph (B) 

14 thereof. 

15 ‘‘(2) ROUNDING.—If any amount as adjusted 

16 under subparagraph (A) is not a multiple of $1,000, 

17 such amount shall be rounded to the next lowest 

18 multiple of $1,000. 

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

20 such regulations as may be necessary or appropriate to 

21 carry out this section, including regulations providing for 

22 a recapture of the credit allowed under this section in 

23 cases where there is a refund in a subsequent taxable year 

24 of any expense which was taken into account in deter25 mining the amount of such credit.’’. 


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1 (b) REPEAL OF DEDUCTION FOR QUALIFIED TUI2 TION AND RELATED EXPENSES.— 

3 (1) IN GENERAL.—Part VII of subchapter B of 

4 chapter 1 of such Code (relating to additional 

5 itemized deductions for individuals) is amended by 

6 striking section 222. 

7 (2) CLERICAL AMENDMENT.—The table of sec8 tions for part VII of subchapter B of chapter 1 of 

9 such Code is amended by striking the item relating 

10 to section 222. 

11 (c) CONFORMING AMENDMENTS.— 

12 (1) Subsection (c) of section 23 of such Code 

13 is amended by striking ‘‘and 1400C’’ and inserting 

14 ‘‘25A, and 1400C’’. 

15 (2) Subparagraph (B) of section 24(b)(3) of 

16 such Code is amended by striking ‘‘and 25B’’ and 

17 inserting ‘‘, 25A, and 25B’’. 

18 (3) Subparagraph (C) of section 25(e)(1) of 

19 such Code is amended— 

20 (A) by striking ‘‘25D’’ in clause (i) and in21 serting ‘‘25A, 25D’’, and 

22 (B) by striking ‘‘24’’ in clause (ii) and in23 serting ‘‘24, 25A’’. 


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1 (4) Paragraph (2) of section 25B(g) of such 

2 Code is amended by striking ‘‘section 23’’ and in3 serting ‘‘sections 23 and 25A’’. 

4 (5) Subsection (c) of section 25D of such Code 

5 is amended— 

6 (A) in paragraph (1) by inserting ‘‘and 

7 section 25A’’ after ‘‘other than this section’’, 

8 and 

9 (B) in paragraph (2) by striking ‘‘24’’ and 

10 inserting ‘‘24, 25A’’. 

11 (6) Subsection (d) of section 1400C of such 

12 Code is amended— 

13 (A) by striking ‘‘section 25D’’ in para14 graph (1) and inserting ‘‘sections 25A and 

15 25D’’, and 

16 (B) by striking ‘‘24’’ in paragraph (2) and 

17 inserting ‘‘24, 25A’’. 

18 (7) Section 62(a) of such Code is amended by 

19 striking paragraph (18). 

20 (8) Subparagraph (A) of section 86(b)(2) of 

21 such Code is amended by striking ‘‘, 222’’. 

22 (9) Subparagraph (B) of section 72(t)(7) of 

23 such Code is amended by striking ‘‘section 

24 25A(g)(2)’’ and inserting ‘‘section 25A(d)(2)’’. 


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1 (10) Subparagraph (A) of section 135(c)(4) of 

2 such Code is amended by striking ‘‘, 222’’. 

3 (11) Subparagraph (A) of section 137(b)(3) of 

4 such Code is amended by striking ‘‘, 222’’. 

5 (12) Subparagraph (A) of section 199(d)(2) of 

6 such Code is amended by striking ‘‘, 222’’. 

7 (13) Clause (ii) of section 219(g)(3)(A) of such 

8 Code is amended by striking ‘‘, 222’’. 

9 (14) Clause (i) of section 221(b)(2)(C) of such 

10 Code is amended by striking ‘‘, 222’’. 

11 (15) Clause (iii) of section 469(i)(3)(F) of such 

12 Code is amended by striking ‘‘221, and 222’’ and in13 serting ‘‘and 221’’. 

14 (16) Subsection (d) of section 221 of such Code 

15 is amended— 

16 (A) by striking ‘‘section 25A(g)(2)’’ in 

17 paragraph (2)(B) and inserting ‘‘section 

18 25A(d)(2)’’, and 

19 (B) by striking ‘‘section 25A(f)(2)’’ in the 

20 second sentence of paragraph (2) and inserting 

21 ‘‘section 25A(c)(3)’’. 

22 (17) Paragraph (3) of section 221(d) of such 

23 Code is amended to read as follows: 


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1 ‘‘(3) 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 the date 

7 of the enactment of the Taxpayer Relief Act of 

8 1997, and 

‘‘(B) is carrying at least 1 9 ⁄2 the normal 

10 full-time workload for the course of study the 

11 student is pursuing.’’. 

12 (18) Subclause (I) of section 529(c)(3)(B)(v) of 

13 such Code is amended by striking ‘‘section 

14 25A(g)(2)’’ and inserting ‘‘25A(d)(2)’’. 

15 (19) Clause (i) of section 529(e)(3)(B) of such 

16 Code is amended by striking ‘‘section 25A(b)(3)’’ 

17 and inserting ‘‘section 221(d)(3)’’. 

18 (20) Subclause (I) of section 530(d)(2)(C)(i) of 

19 such Code is amended by striking ‘‘section 

20 25A(g)(2)’’ and inserting ‘‘section 25A(d)(2)’’. 

21 (21) Clause (iii) of section 530(d)(4)(B) of such 

22 Code is amended by striking ‘‘section 25A(g)(2)’’ 

23 and inserting ‘‘25A(d)(2)’’. 

24 (22) Section 1400O of such Code is amended 

25 by adding at the end the following flush sentence: 


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1 ‘‘For purposes of this section, any reference to section 25A 

2 shall be treated as a reference to such section as in effect 

3 on the day before the date of the enactment of this sen4 tence.’’. 

5 (23) Section 6050S of such Code is amended— 

6 (A) by striking ‘‘qualified tuition and re7 lated expenses’’ in subsection (a)(2) and insert8 ing ‘‘expenses which are included as part of a 

9 student’s cost of attendance (as defined in sec10 tion 472 of the Higher Education Act of 

11 1965)’’, 

12 (B) by striking clause (i) of subsection 

13 (b)(2)(B) and inserting the following new 

14 clause: 

15 ‘‘(i) the cost of attendance (as defined 

16 in section 472 of the Higher Education 

17 Act of 1965) of such individual,’’, and 

18 (C) in subsection (e) by striking ‘‘the 

19 terms’’ and all that follows through ‘‘subsection 

20 (g)(2) thereof)’’ and inserting ‘‘the term ‘eligi21 ble educational institution’ has the meaning 

22 given such term by section 25A(c)(3)’’. 

23 (24) Subparagraph (J) of section 6213(g)(2) of 

24 such Code is amended by striking ‘‘section 

25 25A(g)(1) (relating to higher education tuition and 


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1 related expenses)’’ and inserting ‘‘section 25A(d)(1) 

2 (relating to higher education tax credit)’’. 

3 (25) Paragraph (2) of section 1324(b) of title 

4 31, United States Code, is amended by inserting ‘‘, 

5 25A,’’ after ‘‘section 35’’. 

6 (26) The table of sections for subpart A of part 

7 IV of subchapter A of chapter 1 of such Code is 

8 amended by striking the item relating to section 25A 

9 and inserting the following: 

‘‘Sec. 25A. Higher education tax credit.’’. 

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

11 this section shall apply to expenses paid after December 

12 31, 2007, for education furnished in academic periods be13 ginning after such date. 

Æ 


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