I 
107TH CONGRESS 
2D SESSION 
H. R. 5661
To amend the Internal Revenue Code of 1986 to increase tax incentives 
for higher education. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 16, 2002
Ms. DELAURO (for herself and Mr. OWENS) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Education and the Workforce, for a period to 
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee 
concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to increase 
tax incentives for higher education.
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 ‘‘College Tuition Assist-
ance Act of 2002’’.
SEC. 2. INCREASE IN DEDUCTION FOR QUALIFIED TUITION 
AND RELATED EXPENSES. 
(a) IN GENERAL.—Paragraph (2) of section 222(b) 
of the Internal Revenue Code of 1986 (relating to applica-
ble dollar limit) is amended to read as follows: 
‘‘(2) APPLICABLE DOLLAR LIMIT.—The applica-
ble dollar amount for any taxable year shall be de-
termined as follows:
Applicable 
‘‘Taxable year: 
dollar limit: 
2002 .........................................................................................
$5,000
2003 and thereafter .................................................................
$10,000.’’.
(b) PHASEOUT
BASED
ON
ADJUSTED
GROSS
IN-
COME.—Subsection (b) of section 222 of such Code (relat-
ing to dollar limitations) is amended by adding at the end 
the following new paragraphs: 
‘‘(3) LIMITATION BASED ON ADJUSTED GROSS 
INCOME.—
‘‘(A) IN
GENERAL.—The amount which 
would (but for this paragraph) be allowable as 
a deduction under this section shall be reduced 
(but not below zero) by the amount determined 
under subparagraph (B). 
‘‘(B) 
AMOUNT
OF
REDUCTION.—The 
amount determined under this subparagraph is 
the amount which bears the same ratio to the 
amount which would be so allowable as—
gins, determined by substituting ‘calendar 
year 2001’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof. 
‘‘(B) ROUNDING.—If any amount as ad-
justed under subparagraph (A) is not a multiple 
of $1,000, such amount shall be rounded to the 
next lowest multiple of $1,000.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made in taxable years 
beginning after December 31, 2001. 
SEC. 3. EXPANSION OF LIFETIME LEARNING CREDIT. 
(a) IN GENERAL.—Section 25A(c)(1) of the Internal 
Revenue Code of 1986 (relating to lifetime learning credit) 
is amended by striking ‘‘20 percent’’ and inserting ‘‘28 
percent’’. 
(b) INCREASE IN AGI LIMITS.—
(1) IN
GENERAL.—Subsection (d) of section 
25A of such Code (relating to limitation based on 
modified adjusted gross income) is amended to read 
as follows:
‘‘(d) LIMITATION BASED ON MODIFIED ADJUSTED 
GROSS INCOME.—
‘‘(1) HOPE CREDIT.—
‘‘(A) IN
GENERAL.—The amount which 
would (but for this subsection) be taken into ac-
count under subsection (a)(1) shall be reduced 
(but not below zero) by the amount determined 
under subparagraph (B). 
‘‘(B) 
AMOUNT
OF
REDUCTION.—The 
amount determined under this subparagraph 
equals the amount which bears the same ratio 
to the amount which would be so taken into ac-
count as—
‘‘(i) the excess of—
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $40,000 ($80,000 in the 
case of a joint return), bears to 
‘‘(ii) $10,000 ($20,000 in the case of 
a joint return). 
‘‘(2) LIFETIME LEARNING CREDIT.—
‘‘(A) IN
GENERAL.—The amount which 
would (but for this subsection) be taken into ac-
count under subsection (a)(2) shall be reduced 
(but not below zero) by the amount determined 
under subparagraph (B). 
‘‘(B) 
AMOUNT
OF
REDUCTION.—The 
amount determined under this subparagraph 
equals the amount which bears the same ratio
to the amount which would be so taken into ac-
count as—
‘‘(i) the excess of—
‘‘(I) the taxpayer’s modified ad-
justed gross income for such taxable 
year, over 
‘‘(II) $50,000 ($100,000 in the 
case of a joint return), bears to 
‘‘(ii) $10,000 ($20,000 in the case of 
a joint return). 
‘‘(3) MODIFIED
ADJUSTED
GROSS
INCOME.—
For purposes of this subsection, the term ‘modified 
adjusted gross income’ means the adjusted gross in-
come of the taxpayer for the taxable year increased 
by any amount excluded from gross income under 
section 911, 931, or 933.’’. 
(2) CONFORMING AMENDMENTS.—
(A) Section 25A(h)(2)(A) of such Code is 
amended by striking ‘‘subsection (d)(2)’’ and 
inserting 
‘‘subsection 
(d)(1)(B) 
and 
the 
$50,000 and $100,000 amounts in subsection 
(d)(2)(B)’’. 
(B) Section 25A(h)(2)(A)(ii) of such Code 
is amended by striking ‘‘determined by sub-
stituting’’ and all that follows and inserting the 
following: ‘‘determined—
‘‘(I) in the case of the $40,000 
and $80,000 amounts in subsection 
(d)(1)(B)(i)(II), by substituting ‘cal-
endar year 2000’ for ‘calendar year 
1992’ in subparagraph (B) thereof, 
and 
‘‘(II) in the case of the $50,000 
and $100,000 amounts in subsection 
(d)(2)(B)(i)(II), by substituting ‘cal-
endar year 2001’ for ‘calendar year 
1992’ in subparagraph (B) thereof.’’. 
(c) USE OF CERTAIN NEEDS-BASED AID FOR QUALI-
FIED EXPENSES.—Section 25A(g)(2)(C) of the Internal 
Revenue Code of 1986 (relating to adjustment for certain 
scholarships , etc.) is amended by inserting ‘‘or needs-
based aid received under part A of title IV of the Higher 
Education Act of 1965’’ after ‘‘section 102(a)’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenses paid after December 
31, 2001 (in taxable years ending after such date), for 
education furnished in academic periods beginning after 
such date.
SEC. 4. EXPANSION OF STUDENT LOAN INTEREST DEDUC-
TION ALLOWED ON A PER STUDENT BASIS. 
(a) IN GENERAL.—Section 221(b)(1) of the Internal 
Revenue Code of 1986 (relating to maximum deduction) 
is amended by inserting ‘‘with respect to qualified edu-
cation loans of each eligible student’’ after ‘‘paragraph 
(2),’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to any loan interest 
paid after December 31, 2001, in taxable years ending 
after such date. 
SEC. 5. EXTENSION AND INCREASE OF PELL GRANT MAX-
IMUM AMOUNTS. 
Section 401(b)(2)(A) of the Higher Education Act of 
1965 (20 U.S.C. 1070a(b)(2)(A)) is amended by striking 
clauses (i) through (v) and inserting the following: 
‘‘(i) $6,500 for academic year 2003–2004; and 
‘‘(ii) $7,000 for academic year 2004–2005,’’.
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