I
105TH CONGRESS
1ST SESSION
H. R. 1465
To amend the Internal Revenue Code of 1986 to restore the deduction
for interest on certain educational loans.
IN THE HOUSE OF REPRESENTATIVES
APRIL 28, 1997
Mr. BUNNING 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 restore
the deduction for interest on certain educational loans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. RESTORATION OF DEDUCTION FOR INTEREST
ON EDUCATIONAL LOANS.
(a) IN GENERAL.—Paragraph (2) of section 163(h)
of the Internal Revenue Code of 1986 (defining personal
interest) is amended by striking ‘‘and’’ at the end of sub-
paragraph (D), by redesignating subparagraph (E) as sub-
paragraph (F), and by inserting after subparagraph (D)
the following new subparagraph:
‘‘(ii) which is incurred to pay qualified
educational expenses which are paid or in-
curred within a reasonable period of time
before or after the indebtedness is in-
curred.
‘‘(B) PHASEOUT OF BENEFIT.—
‘‘(i) IN GENERAL.—The amount of in-
terest which would (but for this subpara-
graph) be taken into account under para-
graph (2)(E) for the taxable year shall be
reduced (but not below zero) by the
amount which bears the same ratio to such
interest as the excess of the taxpayer’s ad-
justed gross income for such taxable year
over the applicable dollar amount bears to
phaseout range.
‘‘(ii) APPLICABLE
DOLLAR
AMOUNT;
PHASEOUT
RANGE.—For 
purposes 
of
clause (i)—
‘‘(I) in the case of a return of an
unmarried individual, the applicable
dollar amount is $40,000 and the
phaseout range is $15,000,
‘‘(II) in the case of a joint re-
turn, the applicable dollar amount is
$60,000 and the phaseout range is
$30,000, and
‘‘(III) in any other case, the ap-
plicable dollar amount is zero.
‘‘(C) DEDUCTION ALLOWABLE ONLY FOR
FIRST 48 MONTHS LOAN IS IN REPAYMENT STA-
TUS.—Paragraph (2)(E) shall apply only to in-
terest which is paid or incurred during the first
48 months (whether or not consecutive) for
which a payment is required to be made on the
loan.
‘‘(D) 
QUALIFIED
EDUCATIONAL
EX-
PENSES.—For purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘quali-
fied educational expenses’ means qualified
tuition and related expenses of the tax-
payer, his spouse, or a dependent (as de-
fined in section 152) for attendance at an
educational institution described in section
170(b)(1)(A)(ii).
‘‘(ii) QUALIFIED TUITION AND RELAT-
ED
EXPENSES.—The term ‘qualified tui-
tion and related expenses’ has the meaning
given such term by section 117(b), except
that such term shall include any reason-
able living expenses while away from home.
‘‘(E) ADJUSTMENT OF PHASEOUT FOR IN-
FLATION.—
‘‘(i) IN GENERAL.—In the case of any
taxable year beginning in a calendar year
after 1998, the $40,000 and $60,000
amounts contained in subparagraph (B)
shall be increased by an amount equal to—
‘‘(I) such dollar amount, multi-
plied by
‘‘(II) the cost-of-living adjust-
ment under section 1(f)(3) for the cal-
endar year in which the taxable year
begins, determined by substituting
‘calendar year 1997’ for ‘calendar
year 1992’ in subparagraph (B) there-
of.
‘‘(ii) ROUNDING.—If any amount as
adjusted under clause (i) is not a multiple
of $50, such amount shall be rounded to
the nearest multiple of $50 (or, if such
amount is a multiple of $25, such amount
shall be rounded to the next highest mul-
tiple of $50).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1997, but only with respect to loans the
first required payment on which is after such date.
Æ