II 

109TH CONGRESS 

1ST SESSION S. 759 

To amend the Internal Revenue Code of 1986 to make higher education 

more affordable, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 11, 2005 

Mr. SCHUMER (for himself, Mr. BIDEN, Ms. SNOWE, Mr. DURBIN, Mr. 

SMITH, and Mr. BAYH) introduced the following bill; which was read 

twice and referred to the Committee on the Judiciary 

JULY 1, 2005 

Committee discharged and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to make 

higher education more affordable, 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 ‘‘Make College Afford5 able Act of 2005’’. 
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1 SEC. 2. EXPANSION OF DEDUCTION FOR HIGHER EDU2 CATION EXPENSES. 

3 (a) AMOUNT OF DEDUCTION.—Subsection (b) of sec4 tion 222 of the Internal Revenue Code of 1986 (relating 

5 to deduction for qualified tuition and related expenses) is 

6 amended to read as follows: 

7 ‘‘(b) LIMITATIONS.— 

8 ‘‘(1) DOLLAR LIMITATIONS.— 

9 ‘‘(A) IN GENERAL.—Except as provided in 

10 paragraph (2), the amount allowed as a deduc11 tion under subsection (a) with respect to the 

12 taxpayer for any taxable year shall not exceed 

13 the applicable dollar limit. 

14 ‘‘(B) APPLICABLE DOLLAR LIMIT.—The 

15 applicable dollar limit for any taxable year shall 

16 be determined as follows: 

Applicable 

‘‘Taxable year: dollar amount: 

2005 ......................................................................................... $8,000

2006 and thereafter ................................................................. $12,000. 

17 ‘‘(2) LIMITATION BASED ON MODIFIED AD18 JUSTED GROSS INCOME.— 

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

20 would (but for this paragraph) be taken into ac21 count under subsection (a) shall be reduced 

22 (but not below zero) by the amount determined 

23 under subparagraph (B). 
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1 ‘‘(B) AMOUNT OF REDUCTION.—The 

2 amount determined under this subparagraph 

3 equals the amount which bears the same ratio 

4 to the amount which would be so taken into ac5 count as— 

6 ‘‘(i) the excess of— 

7 ‘‘(I) the taxpayer’s modified ad8 justed gross income for such taxable 

9 year, over 

10 ‘‘(II) $65,000 ($130,000 in the 

11 case of a joint return), bears to 

12 ‘‘(ii) $15,000 ($30,000 in the case of 

13 a joint return). 

14 ‘‘(C) MODIFIED ADJUSTED GROSS IN15 COME.—For purposes of this paragraph, the 

16 term ‘modified adjusted gross income’ means 

17 the adjusted gross income of the taxpayer for 

18 the taxable year determined— 

19 ‘‘(i) without regard to this section and 

20 sections 199, 911, 931, and 933, and 

21 ‘‘(ii) after the application of sections 

22 86, 135, 137, 219, 221, and 469. 

23 For purposes of the sections referred to in 

24 clause (ii), adjusted gross income shall be deter-
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1 mined without regard to the deduction allowed 

2 under this section. 

3 ‘‘(D) INFLATION ADJUSTMENTS.— 

4 ‘‘(i) IN GENERAL.—In the case of any 

5 taxable year beginning in a calendar year 

6 after 2005, both of the dollar amounts in 

7 subparagraph (B)(i)(II) shall be increased 

8 by an amount equal to— 

9 ‘‘(I) such dollar amount, multi10 plied by 

11 ‘‘(II) the cost-of-living adjust12 ment determined under section 1(f)(3) 

13 for the calendar year in which the tax14 able year begins, by substituting ‘cal15 endar year 2004’ for ‘calendar year 

16 1992’ in subparagraph (B) thereof. 

17 ‘‘(ii) ROUNDING.—If any amount as 

18 adjusted under clause (i) is not a multiple 

19 of $50, such amount shall be rounded to 

20 the nearest multiple of $50.’’. 

21 (b) QUALIFIED TUITION AND RELATED EXPENSES

22 OF ELIGIBLE STUDENTS.— 

23 (1) IN GENERAL.—Section 222(a) of the Inter24 nal Revenue Code of 1986 (relating to allowance of 
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1 deduction) is amended by inserting ‘‘of eligible stu2 dents’’ after ‘‘expenses’’. 

3 (2) DEFINITION OF ELIGIBLE STUDENT.—Sec4 tion 222(d) of such Code (relating to definitions and 

5 special rules) is amended by redesignating para6 graphs (2) through (6) as paragraphs (3) through 

7 (7), respectively, and by inserting after paragraph 

8 (1) the following new paragraph: 

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

10 student’ has the meaning given such term by section 

11 25A(b)(3).’’. 

12 (c) DEDUCTION MADE PERMANENT.—Title IX of the 

13 Economic Growth and Tax Relief Reconciliation Act of 

14 2001 (relating to sunset of provisions of such Act) shall 

15 not apply to the amendments made by section 431 of such 

16 Act. 

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

18 this section shall apply to payments made in taxable years 

19 beginning after December 31, 2004. 

20 SEC. 3. CREDIT FOR INTEREST ON HIGHER EDUCATION 

21 LOANS. 

22 (a) IN GENERAL.—Subpart A of part IV of sub23 chapter A of chapter 1 of the Internal Revenue Code of 

24 1986 (relating to nonrefundable personal credits) is 
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1 amended by inserting after section 25B the following new 

2 section: 

3 ‘‘SEC. 25C. INTEREST ON HIGHER EDUCATION LOANS. 

4 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in5 dividual, there shall be allowed as a credit against the tax 

6 imposed by this chapter for the taxable year an amount 

7 equal to the interest paid by the taxpayer during the tax8 able year on any qualified education loan. 

9 ‘‘(b) MAXIMUM CREDIT.— 

10 ‘‘(1) IN GENERAL.—Except as provided in para11 graph (2), the credit allowed by subsection (a) for 

12 the taxable year shall not exceed $1,500. 

13 ‘‘(2) LIMITATION BASED ON MODIFIED AD14 JUSTED GROSS INCOME.— 

15 ‘‘(A) IN GENERAL.—If the modified ad16 justed gross income of the taxpayer for the tax17 able year exceeds $50,000 ($100,000 in the 

18 case of a joint return), the amount which would 

19 (but for this paragraph) be allowable as a credit 

20 under this section shall be reduced (but not 

21 below zero) by the amount which bears the 

22 same ratio to the amount which would be so al23 lowable as such excess bears to $20,000 

24 ($40,000 in the case of a joint return). 
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1 ‘‘(B) MODIFIED ADJUSTED GROSS IN2 COME.—The term ‘modified adjusted gross in3 come’ means adjusted gross income determined 

4 without regard to sections 199, 222, 911, 931, 

5 and 933. 

6 ‘‘(C) INFLATION ADJUSTMENT.—In the 

7 case of any taxable year beginning after 2005, 

8 the $50,000 and $100,000 amounts referred to 

9 in subparagraph (A) shall be increased by an 

10 amount equal to— 

11 ‘‘(i) such dollar amount, multiplied by 

12 ‘‘(ii) the cost-of-living adjustment de13 termined under section (1)(f)(3) for the 

14 calendar year in which the taxable year be15 gins, by substituting ‘2004’ for ‘1992’. 

16 ‘‘(D) ROUNDING.—If any amount as ad17 justed under subparagraph (C) is not a multiple 

18 of $50, such amount shall be rounded to the 

19 nearest multiple of $50. 

20 ‘‘(c) DEPENDENTS NOT ELIGIBLE FOR CREDIT.—No 

21 credit shall be allowed by this section to an individual for 

22 the taxable year if a deduction under section 151 with re23 spect to such individual is allowed to another taxpayer for 

24 the taxable year beginning in the calendar year in which 

25 such individual’s taxable year begins. 
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1 ‘‘(d) LIMIT ON PERIOD CREDIT ALLOWED.—A credit 

2 shall be allowed under this section only with respect to 

3 interest paid on any qualified education loan during the 

4 first 60 months (whether or not consecutive) in which in5 terest payments are required. For purposes of this para6 graph, any loan and all refinancings of such loan shall be 

7 treated as 1 loan. 

8 ‘‘(e) DEFINITIONS.—For purposes of this section— 

9 ‘‘(1) QUALIFIED EDUCATION LOAN.—The term 

10 ‘qualified education loan’ has the meaning given 

11 such term by section 221(d)(1). 

12 ‘‘(2) DEPENDENT.—The term ‘dependent’ has 

13 the meaning given such term by section 152. 

14 ‘‘(f) SPECIAL RULES.— 

15 ‘‘(1) DENIAL OF DOUBLE BENEFIT.—No credit 

16 shall be allowed under this section for any amount 

17 taken into account for any deduction under any 

18 other provision of this chapter. 

19 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE20 TURN.—If the taxpayer is married at the close of 

21 the taxable year, the credit shall be allowed under 

22 subsection (a) only if the taxpayer and the tax23 payer’s spouse file a joint return for the taxable 

24 year. 
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1 ‘‘(3) MARITAL STATUS.—Marital status shall be 

2 determined in accordance with section 7703.’’. 

3 (b) CONFORMING AMENDMENT.—The table of sec4 tions for subpart A of part IV of subchapter A of chapter 

5 1 of the Internal Revenue Code of 1986 is amended by 

6 inserting after the item relating to section 25B the fol7 lowing new item: 

‘‘Sec. 25C. Interest on higher education loans.’’. 

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

9 this section shall apply to any qualified education loan (as 

10 defined in section 25C(e)(1) of the Internal Revenue Code 

11 of 1986, as added by this section) incurred on, before, or 

12 after the date of the enactment of this Act, but only with 

13 respect to any loan interest payment due after December 

14 31, 2004. 

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