I
107TH CONGRESS
1ST SESSION
H. R. 414
To amend the Internal Revenue Code of 1986 to make the Hope and Lifetime
Learning Credits refundable, and to allow taxpayers to obtain short-
term student loans by using the future refund of such credits as collateral
for the loans.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 6, 2001
Mr. ANDREWS 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 make
the Hope and Lifetime Learning Credits refundable, and
to allow taxpayers to obtain short-term student loans
by using the future refund of such credits as collateral
for the loans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. HOPE AND LIFETIME LEARNING CREDITS TO
BE REFUNDABLE.
(a) CREDIT TO BE REFUNDABLE.—Section 25A of
the Internal Revenue Code of 1986 (relating to Hope and
Lifetime Learning credits) is hereby moved to subpart C
of part IV of subchapter A of chapter 1 of such Code (re-
lating to refundable credits) and inserted after section 34.
(b) TECHNICAL AMENDMENTS.—
(1) Section 35 of such Code is redesignated as
section 36.
(2) Section 25A of such Code (as moved by
subsection (a)) is redesignated as section 35.
(3) Paragraph (1) of section 35(a) of such Code
(as redesignated by paragraph (2)) is amended by
striking ‘‘this chapter’’ and inserting ‘‘this subtitle’’.
(4) Subparagraph (B) of section 72(t)(7) of
such 
Code 
is 
amended 
by 
striking 
‘‘section
25A(g)(2)’’ and inserting ‘‘section 35(g)(2)’’.
(5) Subparagraph (A) of section 135(d)(2) of
such Code is amended by striking ‘‘section 25A’’ and
inserting ‘‘section 35’’.
(6) Section 221(e) of such Code is amended—
(A) in paragraph (2)(B), by striking ‘‘sec-
tion 
25A(g)(2)’’ 
and 
inserting 
‘‘section
35(g)(2)’’ and by striking ‘‘section 25A(f)(2)’’
and inserting ‘‘section 35(f)(2)’’, and
(B) in paragraph (3), by striking ‘‘section
25A(b)(3)’’ and inserting ‘‘section 35(b)(3)’’.
(7) Clause (i) of section 529(e)(3)(B) of such
Code is amended by striking ‘‘section 25A(b)(3)’’
and inserting ‘‘section 35(b)(3)’’.
(8) Subparagraph (A) of section 530(b)(2) is
amended by striking ‘‘section 25A(g)(2)’’ and insert-
ing ‘‘section 35(g)(2)’’.
(9) Clause (iii) of section 530(d)(4)(B) is
amended by striking ‘‘section 25A(g)(2)’’ and insert-
ing ‘‘section 35(g)(2)’’.
(10) Subsection (e) of section 6050S is amend-
ed by striking ‘‘section 25A’’ and inserting ‘‘section
35’’.
(11) Subparagraph (J) of section 6213(g)(2) is
amended by striking ‘‘section 25A(g)(1)’’ and insert-
ing ‘‘section 35(g)(1)’’.
(12) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘or from section 35 of such Code’’.
(13) The table of sections for subpart C of part
IV of subchapter A of chapter 1 of such Code is
amended by striking the item relating to section 35
and inserting the following:
‘‘Sec. 35. Hope and Lifetime Learning credits.
‘‘Sec. 36. Overpayments of tax.’’
(14) The table of sections for subpart A of such
part IV is amended by striking the item relating to
section 25A.
(c) EFFECTIVE DATE.—The amendments made by
this subsection shall apply to taxable years beginning after
December 31, 2001.
SEC. 2. USE OF REFUNDS OF HOPE AND LIFETIME LEARN-
ING CREDITS AS COLLATERAL FOR SHORT-
TERM STUDENT LOANS.
(a) IN GENERAL.—Section 35 of the Internal Rev-
enue Code of 1986 (as redesignated by section 1) is
amended by redesignating subsection (i) as subsection (j)
and by inserting after subsection (h) the following new
section:
‘‘(i) TUITION TAX CREDIT ASSIGNMENT LOANS.—
‘‘(1) IN GENERAL.—Any eligible educational in-
stitution may provide to a taxpayer described in
paragraph (3) a tuition tax credit assignment loan.
‘‘(2) 
TUITION
TAX
CREDIT
ASSIGNMENT
LOAN.—For purposes of this subsection, the term
‘tuition tax credit assignment loan’ means a loan
provided to the taxpayer by the eligible educational
institution in return for which the taxpayer agrees
to authorize the Internal Revenue Service to dis-
burse the loan amount directly to the lender out of
the next refund due to the taxpayer that is attrib-
utable to a credit under this section.
‘‘(3) TAXPAYERS ELIGIBLE FOR LOAN.—A tax-
payer is eligible for a loan under this subsection if
the taxpayer is either—
‘‘(A) an eligible student for whom a Hope
Scholarship Credit under subsection (a)(1) is
allowed, or
‘‘(B) a taxpayer for whom a Lifetime
Learning Credit is allowed.
‘‘(4) 
MAXIMUM
AMOUNT
OF
LOAN.—The
amount of a loan provided under this subsection
may not exceed—
‘‘(A) $1,000, or
‘‘(B) in the case of a first-year or second-
year student, $1,500.
‘‘(5) 
LOAN
ORIGINATION
FEE
MAY
BE
CHARGED.—An eligible educational institution pro-
viding a tuition tax credit assignment loan may
charge the taxpayer a loan origination fee of up to
5 percent of the loan amount, but may not charge
interest on the loan amount.
‘‘(6) 3-YEAR TIME LIMIT ON USE OF CREDIT
REFUND AS COLLATERAL.—If a taxpayer who has
obtained a tuition tax credit assignment loan has not
received a refund attributable to a credit under this
section within three years after receiving the loan,
then the loan will become due and payable in accord-
ance with the terms of the loan agreement.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply with respect to credits claimed in
taxable years beginning after December 31, 2001.
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