I

105TH CONGRESS

1ST SESSION H. R. 724

To amend the Internal Revenue Code of 1986 to allow a deduction for

the payment of interest on student loans.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 12, 1997

Mr. KENNEDY of Rhode Island (for himself and Mr. FOX of Pennsylvania)

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 allow a

deduction for the payment of interest on student loans.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Student Loan Afford5 ability Act of 1997’’.

6 SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES.

7 (a) DEDUCTION ALLOWED.—Part VII of subchapter

8 B of chapter 1 of the Internal Revenue Code of 1986 (re9 lating to additional itemized deductions for individuals) is
2

•HR 724 IH

1 amended by redesignating section 221 as section 222 and

2 by inserting after section 220 the following new section:

3 ‘‘SEC. 221. INTEREST ON STUDENT LOANS.

4 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an

5 individual, there shall be allowed as a deduction an

6 amount equal to the interest on qualified higher education

7 loans paid by the taxpayer during the taxable year.

8 ‘‘(b) QUALIFIED HIGHER EDUCATION LOAN.—For

9 purposes of this section—

10 ‘‘(1) IN GENERAL.—The term ‘qualified higher

11 education loan’ means a loan which—

12 ‘‘(A) is made to a student to meet the stu13 dent’s cost of attendance at an institution of

14 higher education;

15 ‘‘(B)(i) is made, insured, or guaranteed by

16 the Federal Government;

17 ‘‘(ii) is made by a State or a political sub18 division of a State;

19 ‘‘(iii) is made from the proceeds of a quali20 fied student loan bond under section 144(b); or

21 ‘‘(iv) is made by an institution of higher

22 education (as defined in section 1201(a) of the

23 Higher Education Act of 1965 (20 U.S.C.

24 1141(a))); and
3

•HR 724 IH

1 ‘‘(C) in combination with all other finan2 cial assistance awarded to (or on behalf of)

3 such student to meet such cost of attendance,

4 does not exceed such cost of attendance for the

5 academic year for which such loan is made.

6 ‘‘(2) COST OF ATTENDANCE.—The term ‘cost of

7 attendance’ has the meaning given such term by sec8 tion 472 of the Higher Education Act of 1965 (20

9 U.S.C. 1087ll).

10 ‘‘(3) INSTITUTION OF HIGHER EDUCATION.—

11 Unless stated otherwise, the term ‘institution of

12 higher education’ means an institution which—

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

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

15 1088), and

16 ‘‘(B) is eligible to participate in programs

17 under title IV of such Act.

18 ‘‘(c) NO DOUBLE BENEFIT.—No deduction shall be

19 allowed under subsection (a) for interest on qualified high20 er education loans with respect to which a deduction is

21 allowed under any other provision of this chapter.

22 ‘‘(d) REGULATIONS.—The Secretary may prescribe

23 such regulations as may be necessary or appropriate to

24 carry out this section, including regulations requiring rec25 ordkeeping and information reporting.’’
4

•HR 724 IH

1 (b) DEDUCTION ALLOWED IN COMPUTING AD2 JUSTED GROSS INCOME.—Section 62(a) of such Code is

3 amended by inserting after paragraph (16) the following

4 new paragraph:

5 ‘‘(17) INTEREST ON STUDENT LOANS.—The de6 duction allowed by section 221.’’

7 (c) CONFORMING AMENDMENT.—The table of sec8 tions for part VII of subchapter B of chapter 1 of such

9 Code is amended by striking the item relating to section

10 221 and inserting:

‘‘Sec. 221. Interest on student loans.

‘‘Sec. 222. Cross reference.’’

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

12 this section shall apply to taxable years beginning after

13 December 31, 1996.

Æ