(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
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) $40,000 ($80,000 in the
case of a joint return), bears to
‘‘(ii) $10,000 ($20,000 in the case of
a joint return).
‘‘(3) MODIFIED
ADJUSTED
GROSS
INCOME.—
For purposes of this subsection, the term ‘modified
adjusted gross income’ means the adjusted gross in-
come of the taxpayer for the taxable year increased
by any amount excluded from gross income under
section 911, 931, or 933.’’.
(2) CONFORMING AMENDMENT.—Paragraph (2)
of section 25A(h) of such Code is amended to read
as follows:
‘‘(2) INCOME LIMITS.—
‘‘(A) HOPE CREDIT.—In the case of a tax-
able year beginning after 2002, the $50,000
and 
$100,000 
amounts 
in 
subsection
(d)(1)(B)(i)(II) shall be increased by an amount
equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 2001’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(B) LIFETIME
LEARNING
CREDIT.—In
the case of a taxable year beginning after 2001,
the $40,000 and $80,000 amounts in sub-
section (d)(2)(B)(i)(II) shall be increased by an
amount equal to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar
year 2000’ for ‘calendar year 1992’ in sub-
paragraph (B) thereof.
‘‘(C) ROUNDING.—If any amount as ad-
justed under subparagraph (A) or (B) is not a
multiple of $1,000, such amount shall be
rounded to the next lowest multiple of $1,000.’’.
(c) COORDINATION WITH OTHER HIGHER EDU-
CATION BENEFITS.—
(1) Subsection (e) of section 25A of the Inter-
nal Revenue Code of 1986 is amended to read as fol-
lows:
‘‘(e) ELECTION NOT TO HAVE SECTION APPLY.—A
taxpayer may elect not to have this section apply with re-
spect to the qualified tuition and related expenses of an
individual for any taxable year.’’.
(2) Section 25A (g) of such Code is amended
by striking paragraph (5) and by redesignating
paragraphs (6) and (7) as paragraphs (5) and (6),
respectively.
(3) Section 135(d)(2)(A) of such Code is
amended by striking ‘‘allowable’’ and inserting ‘‘al-
lowed’’.
(d) 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. 4. RELATIONSHIP BETWEEN TUITION AND FINANCIAL
AID.
(a) STUDY.—The Comptroller General of the United
States shall conduct an annual study to examine whether
the Federal income tax incentives to provide education as-
sistance affect higher education tuition rates in order to
identify if institutions of higher education are absorbing
the intended savings by raising tuition rates.
(b) REPORT.—The Comptroller General of the
United States shall report the results of the study required
under subsection (a) to Congress on an annual basis.
SEC. 5. SENSE OF THE HOUSE OF REPRESENTATIVES RE-
GARDING PELL GRANTS.
It is the sense of the House of Representatives that
the maximum Pell Grant should be increased to $4,700
to pay approximately—
(1) 20 percent of the tuition, fees, room and
board, and other expenses of the average college, or
(2) the tuition and fees of the average public
college.
Æ