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, and Mr. 

SMITH) introduced the following bill; which was read twice and referred 

to the Committee on the Judiciary 

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’’. 

6 SEC. 2. EXPANSION OF DEDUCTION FOR HIGHER EDU7 CATION EXPENSES. 

8 (a) AMOUNT OF DEDUCTION.—Subsection (b) of sec9 tion 222 of the Internal Revenue Code of 1986 (relating 
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1 to deduction for qualified tuition and related expenses) is 

2 amended to read as follows: 

3 ‘‘(b) LIMITATIONS.—

4 ‘‘(1) DOLLAR LIMITATIONS.—

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

6 paragraph (2), the amount allowed as a deduc7 tion under subsection (a) with respect to the 

8 taxpayer for any taxable year shall not exceed 

9 the applicable dollar limit. 

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

11 applicable dollar limit for any taxable year shall 

12 be determined as follows:

Applicable 

‘‘Taxable year: dollar amount: 

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

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

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

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

16 would (but for this paragraph) be taken into ac17 count under subsection (a) shall be reduced 

18 (but not below zero) by the amount determined 

19 under subparagraph (B). 

20 ‘‘(B) AMOUNT OF REDUCTION.—The 

21 amount determined under this subparagraph 

22 equals the amount which bears the same ratio 
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1 to the amount which would be so taken into ac2 count as—

3 ‘‘(i) the excess of—

4 ‘‘(I) the taxpayer’s modified ad5 justed gross income for such taxable 

6 year, over 

7 ‘‘(II) $65,000 ($130,000 in the 

8 case of a joint return), bears to 

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

10 a joint return). 

11 ‘‘(C) MODIFIED ADJUSTED GROSS IN12 COME.—For purposes of this paragraph, the 

13 term ‘modified adjusted gross income’ means 

14 the adjusted gross income of the taxpayer for 

15 the taxable year determined—

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

17 sections 199, 911, 931, and 933, and 

18 ‘‘(ii) after the application of sections 

19 86, 135, 137, 219, 221, and 469. 

20 For purposes of the sections referred to in 

21 clause (ii), adjusted gross income shall be deter22 mined without regard to the deduction allowed 

23 under this section. 

24 ‘‘(D) INFLATION ADJUSTMENTS.—
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1 ‘‘(i) IN GENERAL.—In the case of any 

2 taxable year beginning in a calendar year 

3 after 2005, both of the dollar amounts in 

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

5 by an amount equal to—

6 ‘‘(I) such dollar amount, multi7 plied by 

8 ‘‘(II) the cost-of-living adjust9 ment determined under section 1(f)(3) 

10 for the calendar year in which the tax11 able year begins, by substituting ‘cal12 endar year 2004’ for ‘calendar year 

13 1992’ in subparagraph (B) thereof. 

14 ‘‘(ii) ROUNDING.—If any amount as 

15 adjusted under clause (i) is not a multiple 

16 of $50, such amount shall be rounded to 

17 the nearest multiple of $50.’’. 

18 (b) QUALIFIED TUITION AND RELATED EXPENSES

19 OF ELIGIBLE STUDENTS.—

20 (1) IN GENERAL.—Section 222(a) of the Inter21 nal Revenue Code of 1986 (relating to allowance of 

22 deduction) is amended by inserting ‘‘of eligible stu23 dents’’ after ‘‘expenses’’. 

24 (2) DEFINITION OF ELIGIBLE STUDENT.—Sec25 tion 222(d) of such Code (relating to definitions and 
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1 special rules) is amended by redesignating para2 graphs (2) through (6) as paragraphs (3) through 

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

4 (1) the following new paragraph: 

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

6 student’ has the meaning given such term by section 

7 25A(b)(3).’’. 

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

9 Economic Growth and Tax Relief Reconciliation Act of 

10 2001 (relating to sunset of provisions of such Act) shall 

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

12 Act. 

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

14 this section shall apply to payments made in taxable years 

15 beginning after December 31, 2004. 

16 SEC. 3. CREDIT FOR INTEREST ON HIGHER EDUCATION 

17 LOANS. 

18 (a) IN GENERAL.—Subpart A of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of 

20 1986 (relating to nonrefundable personal credits) is 

21 amended by inserting after section 25B the following new 

22 section: 

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

24 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in25 dividual, there shall be allowed as a credit against the tax 
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1 imposed by this chapter for the taxable year an amount 

2 equal to the interest paid by the taxpayer during the tax3 able year on any qualified education loan. 

4 ‘‘(b) MAXIMUM CREDIT.—

5 ‘‘(1) IN GENERAL.—Except as provided in para6 graph (2), the credit allowed by subsection (a) for 

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

8 ‘‘(2) LIMITATION BASED ON MODIFIED AD9 JUSTED GROSS INCOME.—

10 ‘‘(A) IN GENERAL.—If the modified ad11 justed gross income of the taxpayer for the tax12 able year exceeds $50,000 ($100,000 in the 

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

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

15 under this section shall be reduced (but not 

16 below zero) by the amount which bears the 

17 same ratio to the amount which would be so al18 lowable as such excess bears to $20,000 

19 ($40,000 in the case of a joint return). 

20 ‘‘(B) MODIFIED ADJUSTED GROSS IN21 COME.—The term ‘modified adjusted gross in22 come’ means adjusted gross income determined 

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

24 and 933. 
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1 ‘‘(C) INFLATION ADJUSTMENT.—In the 

2 case of any taxable year beginning after 2005, 

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

4 in subparagraph (A) shall be increased by an 

5 amount equal to—

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

7 ‘‘(ii) the cost-of-living adjustment de8 termined under section (1)(f)(3) for the 

9 calendar year in which the taxable year be10 gins, by substituting ‘2004’ for ‘1992’. 

11 ‘‘(D) ROUNDING.—If any amount as ad12 justed under subparagraph (C) is not a multiple 

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

14 nearest multiple of $50. 

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

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

17 the taxable year if a deduction under section 151 with re18 spect to such individual is allowed to another taxpayer for 

19 the taxable year beginning in the calendar year in which 

20 such individual’s taxable year begins. 

21 ‘‘(d) LIMIT ON PERIOD CREDIT ALLOWED.—A credit 

22 shall be allowed under this section only with respect to 

23 interest paid on any qualified education loan during the 

24 first 60 months (whether or not consecutive) in which in25 terest payments are required. For purposes of this para-
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1 graph, any loan and all refinancings of such loan shall be 

2 treated as 1 loan. 

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

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

5 ‘qualified education loan’ has the meaning given 

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

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

8 the meaning given such term by section 152. 

9 ‘‘(f) SPECIAL RULES.—

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

11 shall be allowed under this section for any amount 

12 taken into account for any deduction under any 

13 other provision of this chapter. 

14 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE15 TURN.—If the taxpayer is married at the close of 

16 the taxable year, the credit shall be allowed under 

17 subsection (a) only if the taxpayer and the tax18 payer’s spouse file a joint return for the taxable 

19 year. 

20 ‘‘(3) MARITAL STATUS.—Marital status shall be 

21 determined in accordance with section 7703.’’. 

22 (b) CONFORMING AMENDMENT.—The table of sec23 tions for subpart A of part IV of subchapter A of chapter 

24 1 of the Internal Revenue Code of 1986 is amended by 
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1 inserting after the item relating to section 25B the fol2 lowing new item:

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

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

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

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

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

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

8 respect to any loan interest payment due after December 

9 31, 2004.

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