I 

110TH CONGRESS 

1ST SESSION H. R. 1407 

To amend the Internal Revenue Code of 1986 to expand incentives for 

education. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 8, 2007 

Mr. ENGLISH of Pennsylvania (for himself, Mrs. MYRICK, Mr. JORDAN of 

Ohio, Mr. POE, and Mr. PICKERING) introduced the following bill; which 

was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to expand 

incentives for education. 

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 ‘‘Higher Education Af5 fordability and Equity Act of 2007’’. 

6 SEC. 2. EXPANSION OF DEDUCTION FOR INTEREST ON EDU7 CATION LOANS. 

8 (a) REPEAL OF DOLLAR LIMITATION; INCREASE IN

9 PHASEOUT BEGINNING POINT.—Subsection (b) of section 


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1 221 of the Internal Revenue Code of 1986 (relating to 

2 maximum deduction) is amended to read as follows: 

3 ‘‘(b) LIMITATION BASED ON MODIFIED ADJUSTED

4 GROSS INCOME.— 

5 ‘‘(1) IN GENERAL.—The amount which would 

6 (but for this subsection) be allowable as a deduction 

7 under this section shall be reduced (but not below 

8 zero) by the amount determined under paragraph 

9 (2). 

10 ‘‘(2) AMOUNT OF REDUCTION.—The amount 

11 determined under this paragraph is the amount 

12 which bears the same ratio to the amount which 

13 would be so taken into account as— 

14 ‘‘(A) the excess of— 

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

16 gross income for such taxable year, over 

17 ‘‘(ii) $100,000 ($200,000 in the case 

18 of a joint return), bears to 

19 ‘‘(B) $15,000 ($30,000 in the case of a 

20 joint return). 

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

22 The term ‘modified adjusted gross income’ means 

23 adjusted gross income determined— 

24 ‘‘(A) without regard to this section and 

25 sections 199, 222, 911, 931, and 933, and 


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1 ‘‘(B) after application of sections 86, 135, 

2 137, 219, and 469.’’. 

3 (b) CONFORMING AMENDMENT.—Section 221(f)(1) 

4 of such Code is amended to read as follows: 

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

6 year beginning after 2008, the $100,000 and 

7 $200,000 amounts in subsection (b) shall each be in8 creased by an amount equal to— 

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

10 ‘‘(B) the cost-of-living adjustment deter11 mined under section 1(f)(3) for the calendar 

12 year in which the taxable year begins, deter13 mined by substituting ‘calendar year 2007’ for 

14 ‘calendar year 1992’ in subparagraph (B) 

15 thereof.’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2007. 

19 SEC. 3. DEDUCTION FOR QUALIFIED TUITION AND RE20 LATED EXPENSES MADE PERMANENT. 

21 (a) REPEAL OF TERMINATION.—Section 222 of the 

22 Internal Revenue Code of 1986 is amended by striking 

23 subsection (e). 


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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2007. 

4 SEC. 4. EDUCATION SAVINGS ACCOUNTS. 

5 (a) INCREASE IN ALLOWABLE CONTRIBUTIONS.— 

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

7 530(b)(1)(A) of the Internal Revenue Code of 1986 

8 is amended by striking ‘‘$2,000’’ and inserting 

9 ‘‘$5,000’’. 

10 (2) CONFORMING AMENDMENT.—Section 

11 4973(e)(1)(A) of such Code is amended by striking 

12 ‘‘$2,000’’ and inserting ‘‘$5,000’’. 

13 (b) REPORTS.—Subsection (h) of section 530 of such 

14 Code is amended by striking the period at the end of the 

15 last sentence and inserting ‘‘, except that reports shall be 

16 so filed and furnished for any calendar year not later than 

17 June 30 of the following year.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2007. 


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1 SEC. 5. ALLOWANCE OF ROOM, BOARD, AND SPECIAL 

2 NEEDS SERVICES IN THE CASE OF SCHOLAR3 SHIPS AND TUITION REDUCTION PROGRAMS 

4 WITH RESPECT TO HIGHER EDUCATION. 

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

6 of the Internal Revenue Code of 1986 (defining qualified 

7 scholarship) is amended by inserting before the period at 

8 the end the following: ‘‘or, in the case of enrollment or 

9 attendance at an eligible educational institution, for quali10 fied higher education expenses.’’. 

11 (b) DEFINITIONS.—Subsection (b) of section 117 of 

12 such Code is amended by adding at the end the following 

13 new paragraph: 

14 ‘‘(3) QUALIFIED HIGHER EDUCATION EX15 PENSES; ELIGIBLE EDUCATIONAL INSTITUTION.— 

16 The terms ‘qualified higher education expenses’ and 

17 ‘eligible educational institution’ have the meanings 

18 given such terms in section 529(e).’’. 

19 (c) TUITION REDUCTION PROGRAMS.—Paragraph 

20 (5) of section 117(d) of such Code (relating to special 

21 rules for teaching and research assistants) is amended by 

22 striking ‘‘shall be applied as if it did not contain the 

23 phrase ‘(below the graduate level)’.’’ and inserting ‘‘shall 

24 be applied— 

25 ‘‘(A) as if it did not contain the phrase 

26 ‘(below the graduate level)’, and 


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1 ‘‘(B) by substituting ‘qualified higher edu2 cation expenses’ for ‘tuition’ the second place it 

3 appears.’’. 

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

5 this section shall apply to expenses paid after December 

6 31, 2007 (in taxable years ending after such date), for 

7 education furnished in academic periods beginning after 

8 such date. 

9 SEC. 6. EXPANSION OF EDUCATIONAL EXPENSES ALLOWED 

10 AS PART OF HOPE SCHOLARSHIP CREDIT. 

11 (a) QUALIFIED TUITION AND RELATED EXPENSES

12 EXPANDED TO INCLUDE BOOKS, SUPPLIES, AND EQUIP13 MENT.—Paragraph (1) of section 25A(f) of the Internal 

14 Revenue Code of 1986 (defining qualified tuition and re15 lated expenses) is amended by adding at the end the fol16 lowing new subparagraph: 

17 ‘‘(D) ADDITIONAL EXPENSES ALLOWED

18 FOR HOPE SCHOLARSHIP CREDIT.—For pur19 poses of the Hope Scholarship Credit, such 

20 term shall include fees, books, supplies, and 

21 equipment required for courses of instruction at 

22 the eligible educational institution.’’. 

23 (b) HOPE SCHOLARSHIP CREDIT NOT REDUCED BY

24 FEDERAL PELL GRANTS AND SUPPLEMENTAL EDU25 CATIONAL OPPORTUNITY GRANTS.—Subsection (g) of secVerDate Aug 31 2005 21:55 Mar 11, 2007 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1407.IH H1407

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1 tion 25A of such Code (relating to special rules) is amend2 ed by adding at the end the following new paragraph: 

3 ‘‘(8) PELL AND SEOG GRANTS.—For purposes 

4 of the Hope Scholarship Credit, paragraph (2) shall 

5 not apply to amounts paid for an individual as a 

6 Federal Pell Grant or a Federal supplemental edu7 cational opportunity grant under subparts 1 and 3, 

8 respectively, of part A of title IV of the Higher Edu9 cation Act of 1965 (20 U.S.C. 1070a and 1070b et 

10 seq., respectively).’’. 

11 (c) EXPANDED HOPE EXPENSES NOT SUBJECT TO

12 INFORMATION REPORTING REQUIREMENTS.—Subsection 

13 (e) of section 6050S of such Code (relating to definitions) 

14 is amended by striking ‘‘subsection (g)(2)’’ and inserting 

15 ‘‘subsections (f)(1)(D) and (g)(2)’’. 

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

17 this section shall apply to expenses paid after December 

18 31, 2007 (in tax years ending after such date), for edu19 cation furnished in academic periods beginning after such 

20 date. 

21 SEC. 7. REPEAL OF EGTRRA SUNSET APPLICABILITY TO 

22 CERTAIN EDUCATION PROVISIONS. 

23 Title IX of the Economic Growth and Tax Relief Rec24 onciliation Act of 2001 (relating to sunset of provisions 


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1 of such Act) shall not apply to subtitles A, B, and D of 

2 title IV of such Act. 

Æ 


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