I 
109TH CONGRESS 
1ST SESSION 
H. R. 238
To amend the Internal Revenue Code of 1986 to designate educational em-
powerment zones in certain low-income areas and to give a tax incentive 
to attract teachers to work in such areas. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 4, 2005
Mr. TOWNS 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 designate 
educational empowerment zones in certain low-income 
areas and to give a tax incentive to attract teachers 
to work in such areas.
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 ‘‘Educational Empower-
ment Act’’.
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SEC. 2. DESIGNATION OF EDUCATIONAL EMPOWERMENT 
ZONES. 
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subchapter: 
‘‘Subchapter X—Educational Empowerment 
Zones
‘‘Sec. 1400E. Designation of educational empowerment zones. 
‘‘SEC. 1400E. DESIGNATION OF EDUCATIONAL EMPOWER-
MENT ZONES. 
‘‘(a) DESIGNATION.—
‘‘(1) EDUCATIONAL EMPOWERMENT ZONE.—
For purposes of this title, the term ‘educational em-
powerment zone’ means any area—
‘‘(A) which is nominated by one or more 
local governments and the State or States in 
which it is located for designation as an edu-
cational empowerment zone (hereinafter in this 
section referred to as a ‘nominated area’), and 
‘‘(B) which the Secretary of Health and 
Human Services and the Secretary of Edu-
cation (hereinafter in this section referred to as 
the ‘Secretaries concerned’) jointly designate as 
an educational empowerment zone.
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‘‘(2) NUMBER OF DESIGNATIONS.—The Secre-
taries concerned may designate not more than 30 
nominated areas as educational empowerment zones. 
‘‘(3) AREAS DESIGNATED BASED ON DEGREE 
OF POVERTY, ETC.—Except as otherwise provided in 
this section, the nominated areas designated as edu-
cational empowerment zones under this subsection 
shall be those nominated areas with the highest av-
erage ranking with respect to the criteria described 
in subsection (c)(3). For purposes of the preceding 
sentence, an area shall be ranked within each such 
criterion on the basis of the amount by which the 
area exceeds such criterion, with the area which ex-
ceeds such criterion by the greatest amount given 
the highest ranking. 
‘‘(4) LIMITATION ON DESIGNATIONS.—
‘‘(A) PUBLICATION
OF
REGULATIONS.—
The Secretaries concerned shall prescribe by 
regulation no later than 4 months after the 
date of the enactment of this section—
‘‘(i) the procedures for nominating an 
area under paragraph (1)(A); 
‘‘(ii) the parameters relating to the 
size and population characteristics of an 
educational empowerment zone; and
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‘‘(iii) the manner in which nominated 
areas will be evaluated based on the cri-
teria specified in subsection (c). 
‘‘(B) TIME LIMITATIONS.—The Secretaries 
concerned may designate nominated areas as 
educational empowerment zones only during the 
24-month period beginning on the first day of 
the first month following the month in which 
the regulations described in subparagraph (A) 
are prescribed. 
‘‘(C) PROCEDURAL
RULES.—The Secre-
taries concerned shall not make any designation 
of a nominated area as an educational em-
powerment zone under paragraph (2) unless—
‘‘(i) a nomination regarding such area 
is submitted in such a manner and in such 
form, and contains such information, as 
the Secretaries concerned shall by regula-
tion prescribe, and 
‘‘(ii) the Secretaries concerned deter-
mine that any information furnished is 
reasonably accurate. 
‘‘(5) NOMINATION PROCESS FOR INDIAN RES-
ERVATIONS.—For purposes of this subchapter, in 
the case of a nominated area on an Indian reserva-
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tion, the reservation governing body (as determined 
by the Secretary of the Interior) shall be treated as 
being both the State and local governments with re-
spect to such area. 
‘‘(b) PERIOD FOR WHICH DESIGNATION IS IN EF-
FECT.—Any designation of an area as an educational em-
powerment zone shall remain in effect during the period 
beginning on the date of the designation and ending on 
the earliest of—
‘‘(1) December 31, 2008, 
‘‘(2) the termination date designated by the 
State and local governments in their nomination, or 
‘‘(3) the date the Secretaries concerned revoke 
such designation. 
‘‘(c) AREA AND ELIGIBILITY REQUIREMENTS.—
‘‘(1) IN
GENERAL.—The Secretary of Com-
merce may designate a nominated area as an edu-
cational empowerment zone under subsection (a) 
only if the area meets the requirements of para-
graphs (2) and (3) of this subsection. 
‘‘(2) AREA REQUIREMENTS.—For purposes of 
paragraph (1), a nominated area meets the require-
ments of this paragraph if—
‘‘(A) the area is within the jurisdiction of 
one or more local governments,
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‘‘(B) the boundary of the area is contin-
uous, and 
‘‘(C) the area does not include an em-
powerment zone (as defined in section 1393(b)) 
other than such a zone designated under section 
1391(g). 
‘‘(3) ELIGIBILITY
REQUIREMENTS.—For pur-
poses of paragraph (1), a nominated are meets the 
requirements of this paragraph if the State and the 
local governments in which it is located certify that 
the nominated area satisfies such conditions as the 
Secretary of Education deems appropriate. 
‘‘(4) CONSIDERATION
OF
DROPOUT
RATE, 
ETC.—The Secretary of Education, in setting forth 
the conditions for eligibility pursuant to paragraph 
(3), shall take into account the extent to which an 
area has low-income families, a high dropout rate, a 
high rate of teen pregnancy, and large school class 
size. 
‘‘(d) COORDINATION WITH TREATMENT OF ENTER-
PRISE COMMUNITIES.—For purposes of this title, if there 
are in effect with respect to the same area both—
‘‘(1) a designation as an educational empower-
ment zone, and 
‘‘(2) a designation as an enterprise community,
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both of such designations shall be given full effect with 
respect to such area. 
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this subchapter, rules similar to the rules of para-
graphs (2), (3), (5), and (7) of section 1393 shall apply.’’. 
(b) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 is amended by adding at the end 
the following new item: 
‘‘SUBCHAPTER X. Educational Empowerment Zones.’’. 
SEC. 3. CREDIT FOR DONATIONS TO SCHOOL DISTRICTS IN 
EDUCATIONAL EMPOWERMENT ZONES. 
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 30A the fol-
lowing new section: 
‘‘SEC. 30B. CONTRIBUTIONS TO SCHOOL DISTRICTS IN EDU-
CATIONAL EMPOWERMENT ZONES. 
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the amount of 
qualified educational empowerment zone contributions 
made by the taxpayer during such year. 
‘‘(b) MAXIMUM CREDIT.—The amount of the credit 
allowed by subsection (a)— 
‘‘(1) in the case of an individual, shall not ex-
ceed $2,000, and
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‘‘(2) in the case of any other taxpayer, shall not 
exceed $10,000. 
‘‘(c) DEFINITION OF QUALIFIED EDUCATIONAL EM-
POWERMENT ZONE CONTRIBUTIONS.—For purposes of 
this section, the term ‘qualified educational empowerment 
zone contributions’ means cash contributions made to any 
school district located in an educational empowerment 
zone (as designated under section 1400E) if such con-
tributions— 
‘‘(1) but for subsection (d), would be allowable 
as a deduction under section 170, and 
‘‘(2) are used for any of the following purposes 
by the school district: 
‘‘(A) Hiring new teachers. 
‘‘(B) Increasing teacher salaries. 
‘‘(C) Training teachers. 
‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 
shall be allowed under this chapter for any contribution 
taken into account in computing the credit under this sec-
tion. 
‘‘(e) ELECTION.—This section shall apply to any tax-
payer for any taxable year only if such taxpayer elects (at 
such time and in such manner as the Secretary may by 
regulations prescribe) to have this section apply for such 
taxable year.
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‘‘(f) APPLICATION WITH OTHER CREDITS; CARRY-
OVER OF EXCESS CREDIT.—The credit allowed by sub-
section (a) for any taxable year shall not exceed the excess 
(if any) of— 
‘‘(1) the regular tax for the taxable year re-
duced by the sum of the credits allowable under sub-
part A and the preceding sections of this subpart, 
over 
‘‘(2) the tentative minimum tax for the taxable 
year. 
If the credit under subsection (a) exceeds the limitation 
of the preceding sentence, such excess shall be added to 
the credit allowable under subsection (a) for the suc-
ceeding taxable year.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 30A the following new item: 
‘‘Sec. 30B. Contributions to school districts in educational empowerment 
zones.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005.
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SEC. 4. TEACHER LOAN FORGIVENESS PROGRAM. 
Part B of title IV of the Higher Education Act of 
1965 is amended by inserting after section 428K (20 
U.S.C. 1078–11) the following new section: 
‘‘SEC. 428L. LOAN FORGIVENESS FOR MATHEMATICS AND 
SCIENCE TEACHERS. 
‘‘(a) PURPOSE.—It is the purpose of this section to 
encourage more individuals to enter and stay in the field 
of teaching mathematics, science, and related fields. 
‘‘(b) PROGRAM.— 
‘‘(1) IN GENERAL.—The Secretary shall carry 
out a program of assuming the obligation to repay, 
pursuant to subsection (c), a loan made, insured, or 
guaranteed under this part or part D (excluding 
loans made under sections 428B and 428C or com-
parable loans made under Part D) for any new bor-
rower after October 12, 1998, who— 
‘‘(A) has been employed as a full-time 
teacher for 3 consecutive complete school years 
in a school that is located in an educational em-
powerment zone, as such term is defined in sec-
tion 1400E of the Internal Revenue Code of 
1986; 
‘‘(B) is a fully qualified teacher; and 
‘‘(C) is not in default on a loan for which 
the borrower seeks forgiveness.
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‘‘(2) AWARD BASIS; PRIORITY.— 
‘‘(A) AWARD BASIS.—Subject to subpara-
graph (B), loan repayment under this section 
shall be on a first-come, first-served basis and 
subject to the availability of appropriations. 
‘‘(B) PRIORITY.—The Secretary shall give 
priority in providing loan repayment under this 
section for a fiscal year to student borrowers 
who received loan repayment under this section 
for the preceding fiscal year. 
‘‘(3) REGULATIONS.—The Secretary is author-
ized to prescribe such regulations as may be nec-
essary to carry out the provisions of this section. 
‘‘(c) LOAN REPAYMENT.— 
‘‘(1) ELIGIBLE AMOUNT.—The amount the Sec-
retary may repay on behalf of any individual under 
this section shall not exceed— 
‘‘(A) 80 percent of the sum of the principal 
amounts outstanding of the individual’s quali-
fying loans at the end of 3 consecutive complete 
school years of service described in subsection 
(b)(1)(A); 
‘‘(B) an additional 10 percent of such sum 
at the end of each of the next 2 consecutive 
complete school years of such service; and
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‘‘(C) a total of more than $10,000. 
‘‘(2) CONSTRUCTION.—Nothing in this section 
shall be construed to authorize the refunding of any 
repaying of a loan made under this part or part D. 
‘‘(3) INTEREST.—If a portion of a loan is re-
paid by the Secretary under this section for any 
year, the proportionate amount of interest on such 
loan which accrues for such year shall be repaid by 
the Secretary. 
‘‘(4) DOUBLE BENEFITS PROHIBITED.—No bor-
rower may, for the same service, receive a benefit 
under both this section and subtitle D of title I of 
the National and Community Service Act of 1990 
(42 U.S.C. 12601 et seq.). No borrower may receive 
a reduction of loan obligations under both this sec-
tion and section 428J or 460. 
‘‘(d) REPAYMENT TO ELIGIBLE LENDERS.—The Sec-
retary shall pay to each eligible lender or holder for each 
fiscal year an amount equal to the aggregate amount of 
loans which are subject to repayment pursuant to this sec-
tion for such year. 
‘‘(e) APPLICATION FOR REPAYMENT.— 
‘‘(1) IN GENERAL.—Each eligible individual de-
siring loan repayment under this section shall sub-
mit a complete and accurate application to the Sec-
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retary at such time, in such manner, and containing 
such information as the Secretary may require. 
‘‘(2) CONDITIONS.—An eligible individual may 
apply for loan repayment under this section after 
completing the required number of years of quali-
fying employment. 
‘‘(3) FULLY QUALIFIED TEACHERS.—An appli-
cation for loan repayment under this section shall 
include such information as is necessary to dem-
onstrate that the applicant— 
‘‘(A) if teaching in a public elementary or 
secondary school (other than as a teacher in a 
public charter school), has obtained State cer-
tification as a teacher (including certification 
obtained through alternative routes to certifi-
cation) or passed the State teacher licensing 
exam and holds a license to teach in such State; 
and 
‘‘(B) if teaching in— 
‘‘(i) an elementary school, holds a 
bachelor’s degree and demonstrates knowl-
edge and teaching skills in reading, writ-
ing, mathematics, science, and other areas 
of the elementary school curriculum; or
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‘‘(ii) a middle or secondary school, 
holds a bachelor’s degree and demonstrates 
a high level of competency in all subject 
areas in which he or she teaches through— 
‘‘(I) a high level of performance 
on a rigorous State or local academic 
subject areas test; or 
‘‘(II) completion of an academic 
major in each of the subject areas in 
which he or she provides instruction. 
‘‘(f) EVALUATION.— 
‘‘(1) IN GENERAL.—The Secretary shall con-
duct, by grant or contract, an independent national 
evaluation of the impact of the program assisted 
under this section. 
‘‘(2) COMPETITIVE BASIS.—The grant or con-
tract described in subsection (b) shall be awarded on 
a competitive basis. 
‘‘(3) CONTENTS.—The evaluation described in 
this subsection shall— 
‘‘(A) determine the number of individuals 
who were encouraged by the program assisted 
under this section to pursue teaching careers; 
‘‘(B) determine the number of individuals 
who remain employed in teaching mathematics,
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science, or related fields as a result of participa-
tion in the program; 
‘‘(C) identify the barriers to the effective-
ness of the program; 
‘‘(D) assess the cost-effectiveness of the 
program; and 
‘‘(E) identify the number of years each in-
dividual participates in the program. 
‘‘(4) INTERIM
AND
FINAL
EVALUATION
RE-
PORTS.—The Secretary shall prepare and submit to 
the President and the Congress such interim reports 
regarding the evaluation described in this subsection 
as the Secretary deems appropriate, and shall pre-
pare and so submit a final report regarding the eval-
uation by January 1, 2008.’’. 
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