I 
112TH CONGRESS 
2D SESSION 
H. R. 5878 
To amend the Internal Revenue Code of 1986 to expand deductions allowed 
for education-related expenses and to extend the American Opportunity 
Tax Credit. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 31, 2012 
Mrs. LOWEY 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 expand 
deductions allowed for education-related expenses and 
to extend the American Opportunity Tax Credit. 
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 ‘‘Deductibility and In-
centives to Promote Learning Opportunities and Maximize 
Assistance Act of 2012’’ or as the ‘‘DIPLOMA Act of 
2012’’. 
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SEC. 2. DEDUCTION FOR HIGHER EDUCATION EXPENSES. 
(a) ELIMINATION
OF
DOLLAR
LIMITATION
FOR 
QUALIFIED TUITION AND RELATED EXPENSES DEDUC-
TION.—Subsection (b) of section 222 of the Internal Rev-
enue Code of 1986 (relating to qualified tuition and re-
lated expenses) is amended to read as follows: 
‘‘(b) LIMITATION BASED ON ADJUSTED GROSS IN-
COME.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
whose adjusted gross income for a taxable year ex-
ceeds $80,000 ($160,000 in the case of a joint re-
turn), the amount of the deduction allowed under 
subsection (a) for the taxable year shall be zero. 
‘‘(2) ADJUSTED GROSS INCOME.—For purposes 
of this subsection, adjusted gross income shall be de-
termined— 
‘‘(A) without regard to this section and 
sections 199, 911, 931, and 933, and 
‘‘(B) after application of sections 86, 135, 
137, 219, 221, and 469.’’. 
(b) TERMINATION.—Subsection (e) of section 222 of 
such Code is amended by striking ‘‘December 31, 2011’’ 
and inserting ‘‘December 31, 2017’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
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SEC. 3. INTEREST AND PRINCIPAL ON EDUCATION LOANS. 
(a) EXPANSION OF DEDUCTION FOR INTEREST ON 
EDUCATION
LOANS
TO
INCLUDE
PRINCIPAL
PAY-
MENTS.—Section 221 of the Internal Revenue Code of 
1986 (relating to interest on education loans) is amend-
ed— 
(1) in subsection (a), by striking ‘‘interest 
paid’’ and inserting ‘‘interest and principal paid’’, 
(2) by redesignating subsections (d), (e), and 
(f) as subsections (e), (f), and (g), respectively, 
(3) by inserting after subsection (c) the fol-
lowing new subsection: 
‘‘(d) LIMIT ON PERIOD DEDUCTION ALLOWED.— 
With respect to principal paid on any qualified education 
loan after the first 60 months (whether or not consecutive) 
in which principal payments are required, a deduction 
shall not be allowed under this section. For purposes of 
this paragraph, any loan and all refinancings of such loan 
shall be treated as 1 loan. Such 60 months shall be deter-
mined in the manner prescribed by the Secretary in the 
case of multiple loans which are refinanced by, or serviced 
as, a single loan and in the case of loans incurred before 
the date of the enactment of this section.’’, and 
(4) in the heading, by striking ‘‘INTEREST’’ 
and inserting ‘‘INTEREST AND PRINCIPAL’’. 
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(b) CLERICAL AMENDMENTS.—The item relating to 
section 221 in the table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended to read 
as follows: 
‘‘Sec. 221. Interest and principal on education loans.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2011. 
SEC. 4. EXTENSION OF AMERICAN OPPORTUNITY TAX 
CREDIT. 
(a) IN GENERAL.—Subsection (i) of section 25A of 
the Internal Revenue Code of 1986 is amended by striking 
‘‘in 2009, 2010, 2011, or 2012’’ in the matter preceding 
paragraph (1) and inserting ‘‘after 2008 and before 
2018’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2012. 
Æ 
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