I 
108TH CONGRESS 
1ST SESSION 
H. R. 129
To amend the Internal Revenue Code of 1986 to make higher education 
more affordable by providing a tax deduction for higher education ex-
penses, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 7, 2003
Mr. HOLT introduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committee on Education and 
the Workforce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to make 
higher education more affordable by providing a tax de-
duction for higher education expenses, and for other 
purposes.
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 ‘‘Higher Education Af-
fordability and Fairness Act’’.
SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES. 
(a) DEDUCTION ALLOWED.—Part VII of subchapter 
B of chapter 1 of the Internal Revenue Code of 1986 (re-
lating to additional itemized deductions for individuals) is 
amended by redesignating section 223 as section 224 and 
by inserting after section 222 the following: 
‘‘SEC. 223. HIGHER EDUCATION EXPENSES. 
‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 
individual, there shall be allowed as a deduction an 
amount equal to the qualified tuition and related expenses 
paid by the taxpayer during the taxable year. 
‘‘(b) LIMITATIONS.—
‘‘(1) LIMITATION FOR FIRST 2 YEARS OF POST-
SECONDARY EDUCATION.—For any taxable year pre-
ceding a taxable year described in paragraph (2), 
the amount of qualified tuition and related expenses 
which may be taken into account under subsection 
(a) shall not exceed—
‘‘(A) except as provided in subparagraph 
(B), the excess (if any) of—
‘‘(i) the lesser of—
‘‘(I) $10,000 for each eligible 
student, or 
‘‘(II) $15,000, over 
‘‘(ii) the amount of such expenses 
which are taken into account in deter-
mining the credit allowable to the taxpayer 
or 
any 
other 
person 
under 
section 
25A(a)(1) with respect to such expenses, 
and 
‘‘(B) in the case of a taxpayer with respect 
to whom the credit under section 25A(a)(1) is 
reduced to zero by reason of section 25A(d)(1), 
$5,000. 
‘‘(2) LIMITATION
FOR
SECOND
YEARS
OF 
POSTSECONDARY EDUCATION.—For any taxable year 
if an eligible student has completed (before the be-
ginning of such taxable year) the first 2 years of 
postsecondary education at an eligible educational 
institution, the amount of qualified tuition and re-
lated expenses which may be taken into account 
under subsection (a) shall not exceed—
‘‘(A) except as provided in subparagraph 
(B) or (C), $10,000, 
‘‘(B) in the case of a taxpayer with respect 
to which a credit under section 25A(a)(1) would 
be reduced to zero by reason of section 
25A(d)(1), $5,000, and 
‘‘(C) in the case of taxpayer with respect 
to whom the credit under section 25A(a)(2) is 
allowed for such taxable year, zero.
‘‘(3) DEDUCTION ALLOWED ONLY FOR 4 TAX-
ABLE YEARS FOR EACH ELIGIBLE STUDENT.—A de-
duction may not be allowed under subsection (a) 
with respect to the qualified tuition and related ex-
penses of an eligible student for any taxable year if 
such a deduction was allowable with respect to such 
expenses for such student for any 4 prior taxable 
years. 
‘‘(c) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES.—For purposes of this section, the term ‘qualified 
tuition and related expenses’ has the meaning given such 
term by section 25A(f)(1) (determined with regard to sec-
tion 25A(c)(2)(B)). 
‘‘(d) ELIGIBLE STUDENT.—For purposes of this sec-
tion, the term ‘eligible student’ has the meaning given 
such term by section 25A(b)(3). 
‘‘(e) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) IDENTIFICATION REQUIREMENT.—No de-
duction shall be allowed under subsection (a) to a 
taxpayer with respect to an eligible student unless 
the taxpayer includes the name, age, and taxpayer 
identification number of such eligible student on the 
return of tax for the taxable year. 
‘‘(2) NO DOUBLE BENEFIT.—
‘‘(A) COORDINATION WITH EXCLUSIONS.—
The amount of qualified tuition and related ex-
penses otherwise taken into account under sub-
section (a) with respect to an eligible student 
shall be reduced (before the application of sub-
section (b)) by the amount of such expenses 
which are taken into account in determining the 
exclusion under section 135 or 530(d)(2) for 
the taxable year. 
‘‘(B) 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. 
‘‘(3) LIMITATION ON TAXABLE YEAR OF DE-
DUCTION.—
‘‘(A) IN GENERAL.—A deduction shall be 
allowed under subsection (a) for qualified tui-
tion and related expenses for any taxable year 
only to the extent such expenses are in connec-
tion with enrollment at an institution of higher 
education during the taxable year. 
‘‘(B) CERTAIN PREPAYMENTS ALLOWED.—
Subparagraph (A) shall not apply to qualified
tuition and related expenses paid during a tax-
able 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. 
‘‘(4) ADJUSTMENT
FOR
CERTAIN
SCHOLAR-
SHIPS AND VETERANS BENEFITS.—The amount of 
qualified tuition and related expenses otherwise 
taken into account under subsection (a) with respect 
to the education of an individual shall be reduced 
(before the application of subsection (b)) by the sum 
of the amounts received with respect to such indi-
vidual 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.
‘‘(5) 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. 
‘‘(6) 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. 
‘‘(7) 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.—Section 62(a) of the Internal 
Revenue Code of 1986 is amended by inserting after para-
graph (18) the following: 
‘‘(19) HIGHER
EDUCATION
EXPENSES.—The 
deduction allowed by section 223.’’. 
(c) DETERMINATION OF ADJUSTED GROSS INCOME 
WITH RESPECT TO OTHER BENEFITS.—
(1) Section 21(a)(2) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘(determined 
without regard to section 223)’’ after ‘‘adjusted 
gross income’’. 
(2) Section 22(d) of such Code is amended—
(A) by inserting ‘‘(determined without re-
gard to section 223’’ after ‘‘adjusted gross in-
come’’ the first place it appears, and 
(B) by inserting ‘‘(as so determined)’’ after 
‘‘adjusted gross income’’ the second place it ap-
pears. 
(3) Section 23(b)(2)(B) of such Code is amend-
ed by inserting ‘‘223,’’ before ‘‘911’’. 
(4) Section 24(b)(1) of such Code is amended 
by inserting ‘‘223,’’ before ‘‘911’’. 
(5) Section 86(b)(2)(A) of such Code is amend-
ed by inserting ‘‘223,’’ before ‘‘911’’. 
(6) Section 137(b)(3)(A) of such Code is 
amended by inserting ‘‘223,’’ before ‘‘911’’. 
(7) Section 151(d)(3) of such Code is amend-
ed—
(A) by inserting ‘‘(determined without re-
gard to section 223)’’ after ‘‘adjusted gross in-
come’’ in subparagraph (A), and
(B) by inserting ‘‘(as so determined)’’ after 
‘‘adjusted gross income’’ in subparagraph (B). 
(8) Section 165(h)(2)(A)(ii) of such Code is 
amended by inserting ‘‘(determined without regard 
to section 223)’’ after ‘‘adjusted gross income’’. 
(9) Section 213(a) of such Code is amended by 
inserting ‘‘(determined without regard to section 
223)’’ after ‘‘adjusted gross income’’. 
(10) Section 219(g)(3)(A)(ii) of such Code is 
amended by inserting ‘‘223,’’ after ‘‘221,’’. 
(11) Section 221(b)(2)(C)(i) of such Code is 
amended by inserting ‘‘223,’’ before ‘‘911’’. 
(12) Section 403(b)(3)(D) of such Code is 
amended—
(A) by inserting ‘‘(determined without re-
gard to section 223)’’ after ‘‘adjusted gross in-
come’’ in clause (ii), and 
(B) by inserting ‘‘(as so determined)’’ after 
‘‘adjusted gross income’’ in the matter following 
clause (ii). 
(13) Section 469(i)(3)(E)(iii) of such Code is 
amended by striking ‘‘and 221’’ and inserting ‘‘, 
221, and 223’’. 
(14) Section 1400C(b)(2) of such Code is 
amended by inserting ‘‘223,’’ before ‘‘911’’.
(d) CONFORMING AMENDMENTS.—The table of sec-
tions for part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by striking the 
item relating to section 223 and inserting the following:
‘‘Sec. 223. Higher education expenses. 
‘‘Sec. 224. Cross reference.’’.
(e) 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. 3. EDUCATION TAX CREDIT FAIRNESS. 
(a) IN GENERAL.—Section 25A(c)(1) of the Internal 
Revenue Code of 1986 (relating to lifetime learning credit) 
is amended by striking ‘‘2003’’ and inserting ‘‘2002’’. 
(b) INCREASE IN AGI LIMITS.—
(1) IN
GENERAL.—Subsection (d) of section 
25A of the Internal Revenue Code of 1986 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) $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). 
‘‘(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