I 

108TH CONGRESS 

2D SESSION H. R. 4136 

To amend the Internal Revenue Code of 1986 to combine the Hope and 

Lifetime Learning credits and to provide a uniform definition of qualifying higher education expenses. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2004 

Mr. HOUGHTON 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 combine 

the Hope and Lifetime Learning credits and to provide 

a uniform definition of qualifying higher education expenses. 

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 ‘‘Education Tax Credit Sim5 plification Act of 2004’’. 
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1 SEC. 2. HOPE AND LIFETIME LEARNING CREDITS COM2 BINED. 

3 (a) IN GENERAL.—So much of section 25A of the 

4 Internal Revenue Code of 1986 (relating to Hope and 

5 Lifetime Learning Credits) as precedes subsection (d) is 

6 amended to read as follows: 

7 ‘‘SEC. 25A. EDUCATION CREDIT. 

8 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in9 dividual, there shall be allowed as a credit against the tax 

10 imposed by this chapter for the taxable year the amount 

11 equal to 50 percent of so much of the qualified expenses 

12 paid by the taxpayer during the taxable year (for edu13 cation furnished to an individual during any academic pe14 riod beginning in such taxable year) as does not exceed 

15 $3,000 for such taxable year with respect to such indi16 vidual. 

17 ‘‘(b) QUALIFIED EXPENSES.—For purposes of sub18 section (a), the term ‘qualified expenses’ means the sum 

19 of— 

20 ‘‘(1) qualified higher education expenses, and 

21 ‘‘(2) the expenses described in subsection (d)(1) 

22 with respect to any course of instruction at an eligi23 ble educational institution to acquire or improve job 

24 skills of the individual.’’. 

25 (b) CONFORMING AMENDMENTS TO CREDIT.— 

26 (1) Section 25A of such Code is amended— 
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1 (A) by striking subsection (h), and 

2 (B) by redesignating subsections (d), (e), 

3 (f), (g), and (i) as subsections (c), (d), (e), (f), 

4 and (g), respectively. 

5 (2) Subsection (f)(2) of section 25A of such 

6 Code, as so redesignated, is amended by striking 

7 ‘‘(before the application of subsections (b), (c), and 

8 (d))’’. 

9 (c) OTHER CONFORMING AND CLERICAL AMEND10 MENTS.— 

11 (1) The following provisions of such Code are 

12 each amended by striking ‘‘section 25A(g)(2)’’ and 

13 inserting ‘‘section 25A(f)(2)’’: 

14 (A) Section 72(t)(7)(B). 

15 (B) Section 221(d)(2)(B). 

16 (C) Section 222(d)(1) (as amended by sec17 tion 132 of this Act). 

18 (D) Section 529(c)(3)(B)(v)(I). 

19 (E) Section 530(b)(2)(A). 

20 (F) Section 530(d)(2)(C)(i)(I). 

21 (G) Section 530(d)(4)(B)(iii). 

22 (2) Section 221(d) of such Code is amended— 

23 (A) in paragraph (2) by striking ‘‘section 

24 25A(f)(2)’’ and inserting ‘‘section 25A(e)(2)’’, 

25 and 
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1 (B) by amending paragraph (3) to read as 

2 follows: 

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

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

5 a student who— 

6 ‘‘(A) meets the requirements of section 

7 484(a)(1) of the Higher Education Act of 1965 

8 (20 U.S.C. 1091(a)(1)), as in effect on the date 

9 of the enactment of this section, and 

‘‘(B) is carrying at least 1 10 ⁄2 the normal 

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

12 student is pursuing.’’. 

13 (3) Section 529(e)(3)(B)(i) of such Code is 

14 amended by striking ‘‘section 25A(b)(3)’’ and insert15 ing ‘‘section 221(d)(3)’’. 

16 (4) The heading of section 529(c)(3)(B)(v) of 

17 such Code is amended to read as follows: ‘‘COORDI18 NATION WITH EDUCATION CREDIT.—’’. 

19 (5) The heading of section 530(d)(2)(C) of such 

20 Code is amended to read as follows: ‘‘COORDINATION

21 WITH EDUCATION CREDIT AND QUALIFIED TUITION

22 PROGRAMS.—’’. 

23 (6) Section 6050S(e) of such Code is amended 

24 by striking ‘‘subsection (g)(2)’’ and inserting ‘‘sub25 section (f)(2)’’. 
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1 (7) Section 6213(g)(2)(J) of such Code is 

2 amended by striking ‘‘section 25A(g)(1)’’ and insert3 ing ‘‘section 25A(f)(1)’’. 

4 (8) The item relating to section 25A in the 

5 table of sections for subpart A of part IV of sub6 chapter A of chapter 1 of such Code is amended to 

7 read as follows: 

‘‘Sec. 25A. Education Credit.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2003. 

11 SEC. 3. UNIFORM DEFINITION OF QUALIFYING HIGHER 

12 EDUCATION EXPENSES. 

13 (a) IN GENERAL.—Paragraph (3) of section 529(e) 

14 of such Code (relating to other definitions and special 

15 rules) is amended to read as follows: 

16 ‘‘(3) QUALIFIED HIGHER EDUCATION EX17 PENSES.— 

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

19 higher education expenses’ means— 

20 ‘‘(i) tuition, fees, books, supplies, and 

21 equipment required for the enrollment or 

22 attendance of a designated beneficiary at 

23 an eligible educational institution; and 

24 ‘‘(ii) expenses for special needs serv25 ices in the case of a special needs bene-
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1 ficiary which are incurred in connection 

2 with such enrollment or attendance. 

3 ‘‘(B) ROOM AND BOARD INCLUDED FOR

4 STUDENTS WHO ARE AT LEAST HALF-TIME.— 

5 ‘‘(i) IN GENERAL.—In the case of an 

6 individual who is an eligible student for 

7 any academic period, such term shall also 

8 include reasonable costs for such period (as 

9 determined under the qualified tuition pro10 gram) incurred by the designated bene11 ficiary for room and board while attending 

12 such institution. For purposes of sub13 section (b)(7), a designated beneficiary 

14 shall be treated as meeting the require15 ments of this clause. 

16 ‘‘(ii) LIMITATION.—The amount treat17 ed as qualified higher education expenses 

18 by reason of clause (i) shall not exceed— 

19 ‘‘(I) the allowance (applicable to 

20 the student) for room and board in21 cluded in the cost of attendance (as 

22 defined in section 472 of the Higher 

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

24 1087ll), as in effect on the date of the 

25 enactment of the Economic Growth 
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1 and Tax Relief Reconciliation Act of 

2 2001) as determined by the eligible 

3 educational institution for such pe4 riod, or 

5 ‘‘(II) if greater, the actual invoice 

6 amount the student residing in hous7 ing owned or operated by the eligible 

8 educational institution is charged by 

9 such institution for room and board 

10 costs for such period. 

11 ‘‘(iii) ELIGIBLE STUDENT.—For pur12 poses of this subparagraph, the term ‘eligi13 ble student’ means, with respect to any 

14 academic period, a student who— 

15 ‘‘(I) meets the requirements of 

16 section 484(a)(1) of the Higher Edu17 cation Act of 1965 (20 U.S.C. 

18 1091(a)(1)), as in effect on the date 

19 of the enactment of this section, and 

‘‘(II) is carrying at least 1 20 ⁄2 the 

21 normal full-time work load for the 

22 course of study the student is pur23 suing. 

24 ‘‘(C) EXCEPTIONS.— 
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1 ‘‘(i) EXCEPTION FOR EDUCATION IN2 VOLVING SPORTS, ETC.—Such term does 

3 not include expenses with respect to any 

4 course or other education involving sports, 

5 games, or hobbies, unless such course or 

6 other education is part of the individual’s 

7 degree program. 

8 ‘‘(ii) EXCEPTION FOR NONACADEMIC

9 FEES.—Such term does not include stu10 dent activity fees, athletic fees, insurance 

11 expenses, or other expenses unrelated to an 

12 individual’s academic course of instruc13 tion.’’. 

14 (b) CONFORMING AMENDMENTS.— 

15 (1) Section 25A and 6050S of such Code are 

16 each amended by striking ‘‘qualified tuition and re17 lated expenses’’ each place it appears and inserting 

18 ‘‘qualified higher education expenses’’. 

19 (2) Section 25A(e)(1) of such Code (as amend20 ed by this Act) is amended to read as follows: 

21 ‘‘(1) QUALIFIED HIGHER EDUCATION EX22 PENSES.—The term ‘qualified higher education ex23 penses’ means the qualified higher education ex24 penses (as defined by section 529(e)(3) without re-
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1 gard to subparagraph (B) thereof) required for the 

2 enrollment or attendance of— 

3 ‘‘(A) the taxpayer, 

4 ‘‘(B) the taxpayer’s spouse, or 

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

6 respect to whom the taxpayer is allowed a de7 duction under section 151, 

8 at an eligible educational institution for courses of 

9 instruction of such individual at such institution.’’. 

10 (3) Section 135(c)(2) of such Code is amend11 ed— 

12 (A) by striking ‘‘tuition and fees’’ and in13 serting ‘‘the qualified higher education expenses 

14 (as defined by section 529(e)(3) without regard 

15 to subparagraph (B) thereof)’’, and 

16 (B) by striking subparagraph (B) and re17 designating subparagraph (C) as subparagraph 

18 (B). 

19 (4) Section 221(d)(2) of such Code is amended 

20 by striking ‘‘the cost of attendance (as defined in 

21 section 472 of the Higher Education Act of 1965, 

22 20 U.S.C. 1087ll, as in effect on the day before the 

23 date of the enactment of this Act)’’ and inserting 

24 ‘‘the qualified higher education expenses (as defined 
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1 by section 529(e)(3) without regard to subparagraph 

2 (B) thereof) incurred for attendance’’. 

3 (5)(A) Section 222 of such Code is amended by 

4 striking ‘‘qualified tuition and related expenses’’ 

5 each place it appears and inserting ‘‘qualified higher 

6 education expenses’’. 

7 (B) Section 222(d)(1) of such Code is amended 

8 to read as follows: 

9 ‘‘(1) QUALIFIED HIGHER EDUCATION EX10 PENSES.—The term ‘qualified higher education ex11 penses’ has the meaning given such term by section 

12 529(e)(3) (without regard to subparagraph (B) 

13 thereof). Such expenses shall be reduced in the same 

14 manner as under section 25A(f)(2).’’. 

15 (C) Section 222(d) of such Code is amended by 

16 redesignating paragraph (6) as paragraph (7) and 

17 by inserting after paragraph (5) the following new 

18 paragraph: 

19 ‘‘(6) ROOM AND BOARD INCLUDED FOR STU20 DENTS WHO ARE FULL-TIME.—No amount shall be 

21 taken into account under this section for an expense 

22 described in section 529(e)(3)(B) (relating to room 

23 and board included for students who are at least 

24 half-time) unless such individual is an eligible stu25 dent (as defined in section 25A(b)(3), determined by 
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1 substituting ‘the normal full-time work load’ in lieu 

of ‘1 2 ⁄2 the normal full-time work load’ in subpara3 graph (B) thereof.’’. 

4 (D) The heading for section 222 of such Code 

5 is amended by striking ‘‘TUITION AND RE6 LATED’’ and inserting ‘‘HIGHER EDU7 CATION’’. 

8 (E) The table of sections for part VII of sub9 chapter B of chapter 1 of such Code is amended by 

10 amending the item relating to section 222 to read as 

11 follows: 

‘‘Sec. 222. Qualified higher education expenses.’’. 

12 (6)(A) Section 6724(d) of such Code is amend13 ed— 

14 (i) in paragraph (1)(B)(x) by striking 

15 ‘‘qualified tuition and related expenses’’ and in16 serting ‘‘qualified higher education expenses’’, 

17 and 

18 (ii) in paragraph (2)(Z) by striking ‘‘quali19 fied tuition and related expenses’’ and inserting 

20 ‘‘qualified higher education expenses’’. 

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

22 this section shall apply to amounts paid in taxable years 

23 beginning after December 31, 2003, for education fur24 nished in periods beginning after such date. 

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