I
105TH CONGRESS
1ST SESSION
H. R. 553
To amend the Internal Revenue Code of 1986 to exclude scholarships and
fellowships from income, to restore the deduction for interest on edu-
cational loans, and to permit penalty-free withdrawals from individual
retirement plans to pay higher education expenses.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 6, 1997
Mr. PRICE of North Carolina (for himself and Mr. ETHERIDGE) 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 exclude
scholarships and fellowships from income, to restore the
deduction for interest on educational loans, and to permit
penalty-free withdrawals from individual retirement plans
to pay higher education expenses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Education Afford-
ability Act of 1997’’.
means any indebtedness incurred to pay quali-
fied educational expenses which are paid or in-
curred within a reasonable period of time before
or after the indebtedness is incurred.
‘‘(B) 
QUALIFIED
EDUCATIONAL
EX-
PENSES.—For purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘quali-
fied educational expenses’ means qualified
tuition and related expenses of the tax-
payer, his spouse, or a dependent for at-
tendance at an educational institution de-
scribed in section 170(b)(1)(A)(ii).
‘‘(ii) QUALIFIED TUITION AND RELAT-
ED
EXPENSES.—The term ‘qualified tui-
tion and related expenses’ means—
‘‘(I) tuition and fees required for
enrollment or attendance at an edu-
cational institution described in sec-
tion 170(b)(1)(A)(ii),
‘‘(II) fees, books, supplies, and
equipment required for courses of in-
struction at such an institution, and
‘‘(III) reasonable living expenses
while away from home.
‘‘(C) DEPENDENT.—For purposes of this
paragraph, the term ‘dependent’ has the mean-
ing given such term by section 152.
‘‘(D) COORDINATION
WITH
PARAGRAPH
(3)(C)(ii).—Any qualified educational loan shall
not be taken into account for purposes of apply-
ing the limitation of paragraph (3)(C)(ii).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 4. DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
PLANS MAY BE USED WITHOUT PENALTY TO
PAY HIGHER EDUCATION EXPENSES.
(a) IN GENERAL.—Paragraph (2) of section 72(t) of
the Internal Revenue Code of 1986 (relating to exceptions
to 10-percent additional tax on early distributions from
qualified retirement plans) is amended by adding at the
end the following new subparagraph:
‘‘(E) DISTRIBUTIONS
FROM
INDIVIDUAL
RETIREMENT
PLANS
FOR
EDUCATIONAL
EX-
PENSES.—Distributions to an individual from
an individual retirement plan to the extent such
distributions do not exceed the qualified edu-
cational 
expenses 
(as 
defined 
in 
section
163(h)(6)) of the taxpayer for the taxable year.
The amount of such expenses for any taxable
year shall be reduced by any amount excludable
from gross income under section 135.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to distributions received after the
date of the enactment of this Act.
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