(a)(1) shall not be allowed for qualified tuition 
and related expenses for the enrollment or at-
tendance of a student for any academic period 
if such student has been convicted of a Federal 
or State felony offense consisting of the posses-
sion or distribution of a controlled substance 
before the end of the taxable year with or with-
in which such period ends. 
‘‘(3) ELIGIBLE
STUDENT.—For purposes of 
this subsection, the term ‘eligible student’ means, 
with respect to any academic period, a student 
who— 
‘‘(A) meets the requirements of section 
484(a)(1) of the Higher Education Act of 1965 
(20 U.S.C. 1091(a)(1)), as in effect on the date 
of the enactment of this section, and 
‘‘(B) is carrying at least 1⁄2 the normal 
full-time work load for the course of study the 
student is pursuing.’’. 
(b) EARNED TUITION CREDIT NOT REDUCED BY 
FEDERAL PELL GRANTS
AND SUPPLEMENTAL EDU-
CATIONAL OPPORTUNITY GRANTS.—Subsection (g) of sec-
tion 25A of such Code (relating to special rules) is amend-
ed by adding at the end the following new paragraph: 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS
‘‘(8) PELL AND SEOG GRANTS.—For purposes 
of the earned tuition credit, paragraph (2) shall not 
apply to amounts paid for an individual as a Federal 
Pell Grant or a Federal supplemental educational 
opportunity grant under subparts 1 and 3, respec-
tively, of part A of title IV of the Higher Education 
Act of 1965 (20 U.S.C. 1070a and 1070b et seq., 
respectively).’’. 
(c) DEFINITION OF QUALIFIED TUITION AND RE-
LATED EXPENSES.—Paragraph (1) of section 25A(f) of 
such Code (relating to definitions) is amended to read as 
follows: 
‘‘(1) QUALIFIED
TUITION
AND
RELATED
EX-
PENSES.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
tuition and related expenses’ means the quali-
fied higher education expenses of— 
‘‘(i) the taxpayer, 
‘‘(ii) the taxpayer’s spouse, or 
‘‘(iii) any dependent of the taxpayer 
with respect to whom the taxpayer is al-
lowed a deduction under section 151. 
‘‘(B) QUALIFIED HIGHER EDUCATION EX-
PENSES.—The term ‘qualified higher education 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS
expenses’ has the meaning given to such term 
by section 529(e)(3).’’. 
(d) CONFORMING AMENDMENTS.—Section 25A of 
such Code is amended— 
(1) in the heading, by striking ‘‘HOPE’’ and in-
serting ‘‘EARNED TUITION’’, 
(2) in subsection (a)(1), by striking ‘‘Hope 
Scholarship Credit’’ and inserting ‘‘earned tuition 
credit’’, 
(3) in subsection (c)(2)(A)— 
(A) in the heading, by striking ‘‘HOPE 
SCHOLARSHIP’’ and inserting ‘‘EARNED TUITION 
CREDIT’’, 
(B) in the text, by striking ‘‘Hope Scholar-
ship Credit’’ and inserting ‘‘earned tuition cred-
it’’, and 
(4) in subsection (h)(1)(A)— 
(A) by striking ‘‘2001’’ and inserting 
‘‘2006’’, 
(B) by striking ‘‘the $1,000 amounts’’ and 
inserting ‘‘the dollar amounts’’, and 
(C) in clause (ii), by striking ‘‘substituting 
‘calendar year 2000’ ’’ and inserting ‘‘sub-
stituting ‘calendar year 2005’ ’’. 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS
SEC. 5. EARNED TUITION AND LIFETIME LEARNING CRED-
ITS TO BE REFUNDABLE. 
(a) CREDIT TO BE REFUNDABLE.—Section 25A of 
the Internal Revenue Code of 1986, as amended by this 
Act, is hereby moved to subpart C of part IV of subchapter 
A of chapter 1 of such Code (relating to refundable cred-
its) and inserted after section 35. 
(b) TECHNICAL AMENDMENTS.— 
(1) Section 36 of such Code is redesignated as 
section 37. 
(2) Section 25A of such Code (as moved by 
subsection (a)) is redesignated as section 36. 
(3) Paragraph (1) of section 36(a) of such Code 
(as redesignated by paragraph (2)) is amended by 
striking ‘‘this chapter’’ and inserting ‘‘this subtitle’’. 
(4) Subparagraph (B) of section 72(t)(7) of 
such 
Code 
is 
amended 
by 
striking 
‘‘section 
25A(g)(2)’’ and inserting ‘‘section 36(g)(2)’’. 
(5) Subparagraph (A) of section 135(d)(2) of 
such Code is amended by striking ‘‘section 25A’’ and 
inserting ‘‘section 36’’. 
(6) Section 221(d) of such Code is amended— 
(A) by striking ‘‘section 25A(g)(2)’’ in 
paragraph 
(2)(B) 
and 
inserting 
‘‘section 
36(g)(2)’’, 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS
(B) by striking ‘‘section 25A(f)(2)’’ in the 
matter following paragraph (2)(B) and insert-
ing ‘‘section 36(f)(2)’’, and 
(C) by striking ‘‘section 25A(b)(3)’’ in 
paragraph (3) and inserting ‘‘section 36(b)(3)’’. 
(7) Section 222 of such Code is amended— 
(A) by striking ‘‘section 25A’’ in subpara-
graph (A) of subsection (c)(2) and inserting 
‘‘section 36’’, 
(B) by striking ‘‘section 25A(f)’’ in sub-
section (d)(1) and inserting ‘‘section 36(f)’’, 
and 
(C) by striking ‘‘section 25A(g)(2)’’ in sub-
section (d)(1) and inserting ‘‘section 36(g)(2)’’. 
(8) Section 529 of such Code is amended— 
(A) by striking ‘‘section 25A(g)(2)’’ in sub-
clause (I) of subsection (c)(3)(B)(v) and insert-
ing ‘‘section 36(g)(2)’’, 
(B) by striking ‘‘section 25A’’ in subclause 
(II) of subsection (c)(3)(B)(v) and inserting 
‘‘section 36’’, and 
(C) by striking ‘‘section 25A(b)(3)’’ in 
clause (i) of subsection (e)(3)(B) and inserting 
‘‘section 36(b)(3)’’. 
(9) Section 530 of such Code is amended— 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00010
Fmt 6652
Sfmt 6201
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS
(A) by striking ‘‘section 25A(g)(2)’’ in sub-
clause (I) of subsection (d)(2)(C)(i) and insert-
ing ‘‘section 36(g)(2)’’, 
(B) by striking ‘‘section 25A’’ in subclause 
(II) of subsection (d)(2)(C)(i) and inserting 
‘‘section 36’’, and 
(C) by striking ‘‘section 25A(g)(2)’’ in 
clause (iii) of subsection (d)(4)(B) and inserting 
‘‘section 36(g)(2)’’. 
(10) Subsection (e) of section 6050S of such 
Code is amended by striking ‘‘section 25A’’ and in-
serting ‘‘section 36’’. 
(11) Subparagraph (J) of section 6213(g)(2) of 
such 
Code 
is 
amended 
by 
striking 
‘‘section 
25A(g)(1)’’ and inserting ‘‘section 36(g)(1)’’. 
(12) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting be-
fore the period ‘‘or from section 36 of such Code’’. 
(13) Section 1400O of such Code is amended— 
(A) by striking paragraph (1) and redesig-
nating paragraphs (2) and (3) as paragraphs 
(1) and (2), respectively, 
(B) by striking ‘‘section 25A(f)(2)’’ and in-
serting ‘‘section 36(f)(2)’’, 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00011
Fmt 6652
Sfmt 6201
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS
(C) by striking ‘‘section 25A(b)(1)’’ in 
paragraph (1) (as redesignated by subpara-
graph (A)) and inserting ‘‘section 36(b)(1)’’, 
and 
(D) by striking ‘‘section 25A(c)(1)’’ in 
paragraph (2) (as redesignated by subpara-
graph (A)) and inserting ‘‘section 36(c)(1)’’. 
(14) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of the Internal Rev-
enue Code of 1986 is amended by striking the item 
relating to section 36 and inserting the following: 
‘‘Sec. 36. Earned tuition and Lifetime Learning credits.’’. 
(15) The table of sections for subpart A of such 
part IV is amended by striking the item relating to 
section 25A. 
SEC. 6. EFFECTIVE DATE. 
The amendments made by this Act shall apply to tax-
able years beginning after December 31, 2006. 
Æ 
VerDate Aug 31 2005 
05:13 May 24, 2006
Jkt 049200
PO 00000
Frm 00012
Fmt 6652
Sfmt 6301
E:\BILLS\H5407.IH
H5407
bajohnson on PROD1PC69 with BILLS