‘‘(D) made by an institution of higher edu-
cation. 
‘‘(2) LIMITATION.—The amount of interest on 
a qualified education loan which is taken into ac-
count under subsection (a)(2) shall not exceed the 
amount which bears the same ratio to such amount 
of interest as— 
‘‘(A) the proceeds from such loan used for 
qualified higher education expenses, bears to 
‘‘(B) the total proceeds from such loan. 
For purposes of the preceding sentence, the term 
‘qualified higher education expenses’ shall be deter-
mined without regard to subsection (c)(1)(A)(i)(IV). 
‘‘(d) SPECIAL RULES.— 
‘‘(1) NO DOUBLE BENEFIT.— 
‘‘(A) IN GENERAL.—No deduction shall be 
allowed under subsection (a) for any expense 
for which a deduction is allowable to the tax-
payer under any other provision of this chapter 
unless the taxpayer irrevocably waives his right 
to the deduction of such expense under such 
other provision. 
‘‘(B) DENIAL OF DEDUCTION IF CREDIT 
ELECTED.—No deduction shall be allowed 
under subsection (a) for a taxable year with re-
spect to the qualified higher education expenses 
of an individual if the taxpayer elects to have 
section 25A apply with respect to such indi-
vidual for such year. 
‘‘(C) DEPENDENTS.—No deduction shall 
be allowed under subsection (a) to any indi-
vidual with respect to whom a deduction under 
section 151 is allowable to another taxpayer for 
a taxable year beginning in the calendar year in 
which such individual’s taxable year begins. 
‘‘(D) COORDINATION WITH EXCLUSIONS.— 
A deduction shall be allowed under subsection 
(a) for qualified higher education expenses only 
to the extent the amount of such expenses ex-
ceeds the amount excludable under section 135 
or 530(d)(2) for the taxable year. 
‘‘(2) LIMITATION ON TAXABLE YEAR OF DE-
DUCTION.— 
‘‘(A) IN GENERAL.—A deduction shall be 
allowed under subsection (a) for qualified high-
er education expenses for any taxable year only 
to the extent such expenses are in connection 
with enrollment at an institution of higher edu-
cation during the taxable year.
‘‘(B) CERTAIN PREPAYMENTS ALLOWED.— 
Subparagraph (A) shall not apply to qualified 
higher education expenses paid during a taxable 
year if such expenses are in connection with an 
academic term beginning during such taxable 
year or during the first 3 months of the next 
taxable year. 
‘‘(3) ADJUSTMENT
FOR
CERTAIN
SCHOLAR-
SHIPS AND VETERANS BENEFITS.—The amount of 
qualified higher education expenses otherwise taken 
into account under subsection (a) or (d)(2) with re-
spect to the education of an individual shall be re-
duced (before the application of subsection (b)) by 
the sum of the amounts received with respect to 
such individual for the taxable year as— 
‘‘(A) a qualified scholarship which under 
section 117 is not includable in gross income, 
‘‘(B) an educational assistance allowance 
under chapter 30, 31, 32, 34, or 35 of title 38, 
United States Code, or 
‘‘(C) a payment (other than a gift, be-
quest, devise, or inheritance within the meaning 
of section 102(a)) for educational expenses, or 
attributable to enrollment at an eligible edu-
cational institution, which is exempt from in-
come taxation by any law of the United States. 
‘‘(4) NO
DEDUCTION
FOR
MARRIED
INDIVID-
UALS FILING SEPARATE RETURNS.—If the taxpayer 
is a married individual (within the meaning of sec-
tion 7703), this section shall apply only if the tax-
payer and the taxpayer’s spouse file a joint return 
for the taxable year. 
‘‘(5) NONRESIDENT ALIENS.—If the taxpayer is 
a nonresident alien individual for any portion of the 
taxable year, this section shall apply only if such in-
dividual is treated as a resident alien of the United 
States for purposes of this chapter by reason of an 
election under subsection (g) or (h) of section 6013. 
‘‘(6) REGULATIONS.—The Secretary may pre-
scribe such regulations as may be necessary or ap-
propriate to carry out this section, including regula-
tions requiring recordkeeping and information re-
porting.’’. 
(b) DEDUCTION
ALLOWED
IN
COMPUTING
AD-
JUSTED GROSS INCOME.—Paragraph (17) of section 
62(a) of such Code is amended to read as follows: 
‘‘(17) HIGHER
EDUCATION
EXPENSES.—The 
deduction allowed by section 221.’’. 
(c) CONFORMING AMENDMENTS.—
(1) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by 
striking the item relating to section 221 and insert-
ing the following new item: 
‘‘Sec. 221. Higher education expenses.’’. 
(2) Section 6050S(e) of such Code is amended 
by striking ‘‘section 221(d)(1)’’ and inserting ‘‘sec-
tion 221(c)(1)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments made after December 
31, 2004. 
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