PARTNERSHIPS Act

Bill: 114-s-2191
Sponsor: full_name: Sen. Wyden, Ron [D-OR]
Introduced: 2015-10-21
Policy area: Education
Subjects: Education of the disadvantaged

Education programs funding

Higher education

Income tax credits

Income tax exclusion

Student aid and college costs

Tax-exempt organizations
Latest action: action_date: 2015-10-21
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2015-10-21
action_desc: Introduced in Senate
text: <p><strong>Promoting Access and Retention Through New Efforts to Require Shared Higher Investments in Postsecondary Success Act or the PARTNERSHIPS Act</strong></p> <p>This bill amends the Higher Education Act of 1965 to establish a state-federal partnership to promote state investment in public higher education. The bill directs the Department of Education to award annual block grants to states that increase public higher education operating support on a per student basis, using a specified formula. As a condition of receiving grants, states must use grant funds to reduce tuition costs and support the enrollment of low-income students in state public educational institutions. </p> <p>The bill amends the Internal Revenue Code to: (1) expand and make permanent the American Opportunity Tax Credit; (2) increase the amount of the tax exclusion for employer-provided educational assistance programs and make such exclusion available to the spouses and dependents of employees; (3) allow tax exclusions for the discharge of certain public interest student loans, repayments of student loans by tax-exempt organizations, and student loans subject to an income-based or income contingent repayment plan; (4) allow a full exclusion from gross income of Federal Pell Grants; and (5) repeal the requirement that distributions from a qualified tuition plan (529 plan) be aggregated for purposes of determining the amount includible in taxpayer income.</p>

tv_txt: II 114th CONGRESS 1st Session S. 2191 IN THE SENATE OF THE UNITED STATES October 21, 2015 Mr. Wyden (for himself and Mr. Merkley ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To establish Federal-State higher education financing partnerships to drive down the cost of tuition for millions of American students.

1. Short title This Act may be cited as the Promoting Access and Retention Through New Efforts to Require Shared Higher Investments in Postsecondary Success Act or the PARTNERSHIPS Act . I State-Federal college affordability and completion partnerships 101. State-Federal college affordability and completion partnerships Title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ) is amended by adding at the end the following: J State-Federal college affordability and completion partnerships 499–1. Purpose The purpose of this part is to establish a State-Federal partnership that incentivizes State investment in public higher education. 499–2. Definitions In this part: (1) Eligible State The term eligible State means a State that provides, to public institutions of higher education, net State operating support per FTE student in an amount equal to not less than 50 percent of the amount that reflects the maximum Federal Pell Grant award amount for the most recent academic year. (2) Full-time equivalent student number The term full-time equivalent student number means a number reflecting the number of students enrolled full-time at a public institution of higher education in the State, and shall be defined and calculated in the manner determined most appropriate by the Secretary. (3) Low-income student The term low-income student means a student who is eligible for a Federal Pell Grant under section 401. (4) Net State operating support The term net State operating support means an amount that is equal to the amount of State funds and local government appropriations used to support public higher education annual operating expenses in the State, calculated in accordance with subparagraphs (A) and (B). (A) Calculation A State's net State operating support shall, for a fiscal year, be an amount that is equal to the difference resulting from the gross amount of State funds appropriated and disbursed by the State and expended by the recipient institutions in the fiscal year for public higher education operating expenses in the State, minus— (i) such appropriations that are returned to the State; (ii) State-appropriated funds derived from Federal sources, including funds provided under this part; (iii) local government funds not appropriated for operating support for public higher education; (iv) amounts that are portions of multi-year appropriations to be distributed over multiple years that are not to be spent for the year for which the calculation is being made; (v) tuition charges remitted to the State to offset State appropriations; (vi) State funding for students in non-credit continuing or adult education courses and non-credit extension courses; (vii) sums appropriated to private nonprofit institutions of higher education, or to proprietary institutions of higher education, for capital outlay or operating expenses; and (viii) any other funds excluded under subparagraph (B). (B) Exclusions Net State operating support does not include— (i) funds for— (I) student aid programs that provide grants to students attending in-State private nonprofit institutions of higher education, in-State proprietary institutions of higher education, independent institutions, in-State public institutions, and out-of-State institutions; (II) capital outlay; (III) deferred maintenance; or (IV) research and development; or (ii) any other funds that the Secretary may exclude. (5) Net State operating support per FTE student The term net State operating support per FTE student means, for a fiscal year— (A) the net State operating support for the previous fiscal year; divided by (B) the full-time equivalent student number for the previous fiscal year. (6) Public institution The term public institution means an institution of higher education (as defined in section 101) whose liabilities are backed by the full faith and credit of the State or its equivalent, as determined in accordance with section 668.15 of title 34, Code of Federal Regulations, or any successor regulation. (7) Private nonprofit institution of higher education The term private nonprofit institution of higher education means an institution of higher education, as defined in section 102, that is a private nonprofit institution. (8) Proprietary institution of higher education The term proprietary institution of higher education has the meaning given the term in section 102(b). 499–3. Authorization; use of funds (a) Authorization The Secretary shall award annual block grants to eligible States to encourage States to provide additional funding for public higher education. (b) Use of funds by States An eligible State receiving a block grant under this part shall allocate 100 percent of block grant funding to public institutions for public higher education expenditures in accordance with subsection (c). (c) Use of funds by public institutions A public institution that receives funds under this part shall— (1) use a portion of such funds to directly reduce tuition costs or mitigate the need to raise tuition and fees for students residing in the State; (2) use a portion of such funds to support the enrollment of low-income students in the institution; (3) use a portion of such funds to support retention and degree completion of low-income students; and (4) create a publicly available report that documents the institution's efforts to satisfy the requirements described in paragraphs (1) through (3). (d) Prohibitions (1) No use for endowments A public institution may not use funds received under this part to increase the endowment of the public institution. (2) No use for athletic or commercial venues No funds awarded under this part may be used for the modernization, renovation, or repair of stadiums or other facilities of a public institution primarily used for athletic contests or events for which admission is charged to the general public. (e) State limitations on institutions Nothing in this section shall be construed to prohibit a State from establishing additional requirements for public institutions in the State for the purpose of increasing the affordability of higher education. 499–4. Grant formula (a) Grant Formula The Secretary shall award a block grant to an eligible State for a fiscal year in an amount equal to the product of— (1) the marginal Federal match amount for the fiscal year, as determined under subsection (b); multiplied by (2) the full-time equivalent student number for the previous fiscal year. (b) Federal Match Amount for eligible States The marginal Federal match amount shall be the following: (1) Eligible States with net State operating support per FTE student between 50 percent and 130 percent of the maximum Federal Pell Grant The marginal Federal match amount for an eligible State with a net State operating support per FTE student for the fiscal year that is equal to or more than 50 percent of the amount of the maximum Federal Pell Grant under section 401 for the most recent fiscal year but is less than 130 percent of such amount, shall be equal to the product of— (A) the amount of the maximum Federal Pell Grant for the most recent fiscal year; multiplied by (B) the result of the mathematical expression 0.26 x 2 − 0.14 x + 0.005, where x represents the ratio obtained by dividing the eligible State's net State operating support per FTE student by the amount of the maximum Federal Pell Grant for the most recent fiscal year. (2) Eligible States with net State operating support equal to or greater than 130 percent of the maximum Federal Pell Grant The marginal Federal match amount for an eligible State with a net State operating support per FTE student for the fiscal year equal to or greater than 130 percent of the amount of the maximum Federal Pell Grant for the most recent fiscal year, shall be equal to the sum of— (A) the amount calculated under paragraph (1) for a State with a net State operating support per FTE student equal to 130 percent of the amount of the maximum Federal Pell Grant for the most recent fiscal year; and (B) 10 percent of the amount by which the eligible State's net State operating support per FTE student exceeds 130 percent of such maximum Federal Pell Grant, except that in no case shall the marginal Federal match under this paragraph exceed an amount equal to 30 percent of the amount of the maximum Federal Pell Grant for the most recent fiscal year. (c) Ratable Reduction If the sums made available under this part for any fiscal year are insufficient to pay the full amounts that all States are eligible to receive in accordance with this section for such year, the Secretary shall establish procedures for ratably reducing each State's award amount. 499–5. Accountability and enforcement (a) Annual Report (1) In general Beginning for the first fiscal year after a State receives a block grant under this part, the State shall prepare and submit an annual report to the Secretary, which shall include detailed information about the State's use of the grant funds to increase the affordability of public higher education and increase the enrollment and completion rates of low-income students (as measured by eligibility for a Federal Pell Grant). (2) Contents A report described in paragraph (1) shall— (A) describe the cause of any increases in public higher education costs and the sources of new funding to address such increases; (B) describe all actions taken to incentivize public institutions to reduce tuition costs, or mitigate the need to raise tuition and fees for in-State students; (C) explain the extent to which public institutions supported the enrollment of low-income students who are eligible for Federal Pell Grants or other need-based financial assistance; (D) disclose how the State distributed the allotment provided under this part to all public institutions, and the rationale for such distribution; (E) include the aggregated graduation rates for low-income students (based on eligibility for Federal Pell Grants), part-time students, and transfer students, disaggregated by type of degree or credential; (F) detail State efforts to improve the retention and graduation rates of low-income students at both 2-year and 4-year institutions of higher education; and (G) be publicly available in a manner that is easily accessible to parents, students, and consumer advocates. (b) Maintaining Net State Operating Support Per FTE Student (1) In general Each State receiving an allotment under this part for a fiscal year shall— (A) ensure that the amount expended by the State, from funds derived from non-Federal sources, for net State operating support per FTE student for the preceding fiscal year was not less than the amount expended by the State for net State operating support per FTE student for the second preceding fiscal year; and (B) demonstrate the State's compliance with subparagraph (A) by providing the Secretary with a written assurance and detailed documentation. (2) Penalty If a State does not comply with paragraph (1), the State's grant award under this part shall be reduced by an amount equal to the product of— (A) the difference between— (i) the net State operating support per FTE student for the second preceding fiscal year; minus (ii) the net State operating support per FTE student for the preceding fiscal year; multiplied by (B) the full-time equivalent student number for the previous fiscal year. (c) Maintenance of effort for State-Based financial aid and avoidance of tuition inflation Each State receiving an allotment under this part for a fiscal year shall, as a condition of receiving the allotment— (1) maintain the level of State student need-based financial aid support provided for costs associated with postsecondary education at not less than the average annual level of such support provided for the 3 academic years immediately preceding the year for which the State is receiving the allotment; and (2) ensure that for the academic year immediately following the academic year for which the State is receiving the allotment, all public institutions of higher education in the State will not increase tuition for in-State students by a percentage greater than the estimated percentage increase in the Consumer Price Index (as determined by the Secretary, using the definition in section 478(f)) for the calendar year for which the State is receiving the allotment. (d) Authority to compromise Notwithstanding subsections (b) and (c), the Secretary may waive any maintenance of support and effort requirement described in such subsections for a State if there is a clear case of a significant economic downturn in the State as evidenced by a reduction in State domestic product, real per capita income, and employment. Such determination shall only be made by the Secretary following a written appeal by the State that documents recent and significant decreases in economic activity in the State. 499–6. Authorization of appropriations There are authorized to be appropriated to carry out this part such sums as may be necessary for fiscal year 2016 and each of the five succeeding fiscal years. . II Tax provisions 201. Permanent extension and modification of American Opportunity and Lifetime Learning credits (a) In general Section 25A of the Internal Revenue Code of 1986 is amended to read as follows: 25A. American Opportunity Tax Credit (a) In general In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year, with respect to each eligible student, an amount equal to the sum of— (1) 100 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished to the eligible student during any academic period beginning in such taxable year) as does not exceed $2,000, plus (2) 25 percent of so much of such expenses so paid as exceeds the dollar amount in effect under paragraph (1) but does not exceed twice such dollar amount. (b) Portion of credit refundable 60 percent of the credit allowable under subsection (a) with respect to each eligible student (determined without regard to this subsection and section 26(a) and after application of all other provisions of this section) shall be treated as a credit allowable under subpart C (and not under this part). The preceding sentence shall not apply to any taxpayer for any taxable year if such taxpayer is a child to whom section 1(g) applies for such taxable year. (c) 5-Year limitation No credit shall be allowed under subsection (a) with respect to any eligible student for any taxable year if such student was taken into account in determining the credit allowed under such subsection (by the taxpayer or any other individual) for any 5 prior taxable years. (d) Lifetime Learning credit (1) In general In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to 20 percent of so much of the qualified tuition and related expenses paid by the taxpayer during the taxable year (for education furnished during any academic period beginning in such taxable year) as does not exceed $10,000. (2) Special rules for determining expenses (A) Coordination with American Opportunity Tax Credit The qualified tuition and related expenses with respect to an individual who is an eligible student for whom a credit under subsection (a) is allowed for the taxable year shall not be taken into account under this subsection. (B) Expenses eligible for Lifetime Learning credit For purposes of paragraph (1), qualified tuition and related expenses shall include expenses described in subsection (f)(2) with respect to any course of instruction at an eligible educational institution to acquire or improve job skills of the individual. (e) Limitation based on modified adjusted gross income (1) In general The amount allowable as a credit under subsection (a) or (d) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this subsection and subsection (b) but after application of all other provisions of this section) as— (A) the excess of— (i) the taxpayer’s modified adjusted gross income for such taxable year, over (ii) $80,000 in the case of the credit under subsection (a), or $40,000 in the case of the credit under subsection (d), bears to (B) $10,000. (2) Joint returns In the case of a joint return, each of the dollar amounts in effect under paragraph (1) shall be increased to twice such amount. (3) Modified adjusted gross income For purposes of this subsection, the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section 911, 931, or 933. (4) Inflation adjustment for Lifetime Learning credit phaseout (A) In general In the case of a taxable year beginning after 2001, the $40,000 amount in paragraph (1)(A)(ii) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2000 for calendar year 1992 in subparagraph (B) thereof. (B) Rounding If any amount as adjusted under subparagraph (A) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000. (f) Definitions For purposes of this section— (1) Eligible student 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 August 5, 1997, and (B) is carrying at least 1/2 the normal full-time work load for the course of study the student is pursuing. (2) Qualified tuition and related expenses (A) In general The term qualified tuition and related expenses means tuition, fees, and course materials, required for enrollment or attendance of— (i) the taxpayer, (ii) the taxpayer’s spouse, or (iii) any dependent of the taxpayer with respect to whom the taxpayer is allowed a deduction under section 151, at an eligible educational institution for courses of instruction of such individual at such institution. (B) Computer-related expenses included Except as provided in subsection (g)(9), such term includes expenses for the purchase of computer or peripheral equipment (as defined in section 168(i)(2)(B)), computer software (as defined in section 197(e)(3)(B)), or Internet access and related services, if such equipment, software, or services are to be used primarily by the eligible student during any of the years the student is enrolled at an eligible educational institution. (C) Special needs services included Such term includes expenses for special needs services in the case of a special needs beneficiary (within the meaning of section 529(e)(3)(A)(ii) as in effect on the day before the date of the enactment of the Promoting Access and Retention Through New Efforts to Require Shared Higher Investments in Postsecondary Success Act ) which are incurred in connection with the enrollment or attendance of the student at an eligible educational institution. (D) Exception for education involving sports, etc Such term does not include expenses with respect to any course or other education involving sports, games, or hobbies, unless such course or other education is part of the individual’s degree program. (E) Exception for nonacademic fees Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual's academic course of instruction. (3) Eligible educational institution The term eligible educational institution means an institution— (A) which is described in section 481 of the Higher Education Act of 1965 ( 20 U.S.C. 1088 ), as in effect on August 5, 1997, and (B) which is eligible to participate in a program under title IV of such Act. (g) Special rules (1) Identification requirement No credit shall be allowed under this section to a taxpayer with respect to the qualified tuition and related expenses of an individual unless the taxpayer includes the name and taxpayer identification number of such individual, and the employer identification number of any institution to which such expenses were paid, on the return of tax for the taxable year. (2) Adjustment for certain scholarships, etc (A) In general The amount of qualified tuition and related expenses otherwise taken into account under subsection (a) or (d) with respect to an individual for an academic period shall be reduced (before the application of subsection (e)) by the sum of any amounts paid for the benefit of such individual which are allocable to such period as— (i) a qualified scholarship which is excludable from gross income under section 117, (ii) an educational assistance allowance under chapter 30, 31, 32, 34, or 35 of title 38, United States Code, or under chapter 1606 of title 10, United States Code, and (iii) a payment (other than a gift, bequest, devise, or inheritance within the meaning of section 102(a)) for such individual's educational expenses, or attributable to such individual's enrollment at an eligible educational institution, which is excludable from gross income under any law of the United States. (B) Coordination with Pell Grants not used for qualified tuition and related expenses For purposes of subparagraph (A), the amount of any Federal Pell Grant under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a ) shall be reduced (but not below zero) by the amount of expenses (other than qualified tuition and related expenses) which are taken into account in determining the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, as in effect on the date of the enactment of the Promoting Access and Retention Through New Efforts to Require Shared Higher Investments in Postsecondary Success Act ) of such individual at an eligible educational institution for the academic period for which the credit under subsection (a) or (d) (whichever is applicable) is being determined. (3) Treatment of expenses paid by dependent If a deduction under section 151 with respect to an individual is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins— (A) no credit shall be allowed under this section to such individual for such individual’s taxable year, (B) qualified tuition and related expenses paid by such individual during such individual’s taxable year shall be treated for purposes of this section as paid by such other taxpayer, and (C) a statement described in paragraph (8) and received by such individual shall be treated as received by the taxpayer. (4) Treatment of certain prepayments If qualified tuition and related expenses are paid by the taxpayer during a taxable year for an academic period which begins during the first 3 months following such taxable year, such academic period shall be treated for purposes of this section as beginning during such taxable year. (5) Denial of double benefit No credit shall be allowed under this section for any amount for which a deduction is allowed under any other provision of this chapter. (6) No credit for married individuals filing separate returns If the taxpayer is a married individual (within the meaning of section 7703), this section shall apply only if the taxpayer and the taxpayer’s spouse file a joint return for the taxable year. (7) Nonresident aliens If the taxpayer is a nonresident alien individual for any portion of the taxable year, this section shall apply only if such individual is treated as a resident alien of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013. (8) Payee statement requirement Except as otherwise provided by the Secretary, no credit shall be allowed under this section unless the taxpayer receives a statement furnished under section 6050S(d) which contains all of the information required by paragraph (2) thereof. (9) Reduced credit in case of certain students In the case of a student who is not an eligible student for the taxable year solely by reason of subparagraph (B) of subsection (f)(1), the student shall be treated as an eligible student for purposes of this section (other than subsection (f)(2)(B)) for such taxable year except that the dollar amount in effect under subsection (a)(1) shall be 1/2 of the amount otherwise in effect for such taxable year. (h) Regulations The Secretary may prescribe such regulations or other guidance as may be necessary or appropriate to carry out this section, including regulations providing for a recapture of the credit allowed under this section in cases where there is a refund in a subsequent taxable year of any amount which was taken into account in determining the amount of such credit. . (b) Requirement To report tuition paid rather than tuition billed Section 6050S(b)(2)(B)(i) of the Internal Revenue Code of 1986 is amended by striking or the aggregate amount billed . (c) Repeal of education savings bonds (1) In general Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by striking section 135. (2) Table of contents The table of sections for part III of subchapter B of chapter 1 of such Code is amended by striking the item relating to section 135. (d) Termination of Coverdell education savings accounts (1) In general Section 530 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (i) Termination Subsection (a) shall not apply to the portion of any Coverdell education savings account that is attributable to a contribution made after the later of— (1) December 31, 2015, or (2) the date of the enactment of this subsection. . (2) Rollovers to qualified tuition programs Subsection (b) of section 529 of such Code is amended by adding at the end the following new paragraph: (7) Rollovers from Coverdell education savings accounts A program shall not be treated as a qualified tuition program for any taxable year beginning after December 31, 2015, and before January 1, 2017, unless it accepts (without regard to any contribution limitations otherwise applicable under the program) contributions made during such taxable year which are paid or distributed from a Coverdell education savings account for the benefit of the same designated beneficiary as such program or a member of the family of such beneficiary. . (e) Conforming amendments (1) Section 62(d)(2) of such Code is amended by striking 135, . (2) Sections 86(b)(2)(A), 137(b)(3)(B), 199(d)(2)(A), 219(g)(3)(A)(ii), and 221(b)(2)(C)(ii) of such Code are each amended by striking 135, . (3) Section 221(d) of such Code is amended— (A) by striking 25A(f)(2) in paragraph (2) and inserting 25A(f)(3) , and (B) by striking 25A(b)(3) in paragraph (3) and inserting 25A(f)(1) . (4) Section 222 of such Code is amended— (A) by striking elects to have section 25A apply in subsection (c)(2)(A) and inserting claims the credit under section 25A , (B) by striking if credit elected in the heading of subparagraph (A) of subsection (c)(2) and inserting for 25A expenses , (C) by striking 135, in subsection (c)(2)(B), and (D) by striking 25A(f) in subsection (d)(1) and inserting 25A(f)(2) . (5) Section 469(i)(3)(F)(ii) of such Code is amended by striking sections 135 and 137 and inserting section 137 . (6) Section 530(d)(2)(C) of such Code is amended by striking Hope and Lifetime Learning credits in the heading and inserting American opportunity tax credit . (7) Section 6103(l)(20)(A)(iv) is amended by striking sections 135 and 911 and inserting section 911 . (8) Section 6211(b)(4)(A) of such Code is amended by striking subsection (i)(6) and inserting subsection (b) . (9) Section 6213(g)(2)(J) of such Code is amended by striking TIN required under section 25A(g)(1) and inserting TIN or employer identification number required under section 25A(g)(1) . (10) Section 1004(c) of division B of the American Recovery and Reinvestment Tax Act of 2009 is amended— (A) in paragraph (1)— (i) by striking section 25A(i)(6) each place it appears and inserting section 25A(b) , (ii) by striking “with respect to taxable years beginning after 2008 and before 2018” in subparagraph (A) and inserting “with respect to each taxable year”, and (iii) by striking “for taxable years beginning after 2008 and before 2018” in subparagraph (B) and inserting “for each taxable year”, (B) in paragraph (2), by striking Section 25A(i)(6) and inserting Section 25A(b) , and (C) in paragraph (3)(C), by striking subsection (i)(6) and inserting subsection (b) . (11) The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by striking the item relating to section 25 A and inserting the following new item: Sec. 25A. American opportunity tax credit. . (f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2017. 202. Expansion of exclusion for educational assistance programs (a) In general Paragraph (2) of section 127(a) of the Internal Revenue Code of 1986 is amended— (1) by striking $5,250 in the heading and inserting $10,500 , and (2) by striking $5,250 both places it appears and inserting $10,500 . (b) Expenses of employee's spouse and dependents Paragraph (2) of section 127(c) of the Internal Revenue Code of 1986 is amended by striking includes and all that follows and inserting “includes, for any year— (A) an individual who is an employee within the meaning of section 401(c)(1) (relating to self-employed individuals), and (B) any spouse or dependent of an employee. . (c) Employer-Provided educational loan repayment assistance (1) In general Paragraph (1) of section 127(c) of the Internal Revenue Code of 1986 is amended— (A) by striking and at the end of subparagraph (A), (B) by striking the comma at the end of subparagraph (B) and inserting , and , and (C) by inserting after subparagraph (B) the following new subparagraph: (C) the payment by an employer of any portion of the indebtedness of an employee pursuant to a student loan of the employee, . (2) Student loan Section 127(c) of such Code is amended— (A) by redesignating paragraphs (4), (5), (6), and (7) as paragraphs (5), (6), (7), and (8), respectively, and (B) by inserting after paragraph (3) the following new paragraph: (4) Student loan The term student loan means any loan to an individual to assist the individual in attending an educational organization described in section 170(b)(1)(A)(ii). . (3) Conforming amendment; denial of double benefit Paragraph (1) of section 221(e) of such Code is amended by inserting before the period the following: , or for which an exclusion is allowable under section 127 to the taxpayer's employer by reason of the payment by such employer of any indebtedness on a student loan of the taxpayer . (d) Effective date The amendments made by this section shall apply to expenses paid or incurred and loan payments made in taxable years beginning after December 31, 2015. 203. Exclusion of certain student loan repayments and loan forgiveness (a) In general Paragraph (1) of section 108(f) of the Internal Revenue Code of 1986 is amended by striking (in whole or in part) and all that follows and inserting (in whole or in part) or, in the case of paragraph (3), the repayment of any student loan if such discharge or repayment meets the requirements of paragraph (2), (3), or (4). . (b) Public interest student loans Paragraph (2) of section 108(f) of the Internal Revenue Code of 1986 is amended to read as follows: (2) Certain public interest student loans (A) In general A discharge meets the requirements of this paragraph if it is made pursuant to a provision of a student loan described in subparagraph (B) under which all or part of the indebtedness of an individual would be discharged if the individual worked for a certain period of time in certain professions for any of a broad class of employers. (B) Limitation A student loan is described in this subparagraph if such loan is made— (i) by the United States, or an instrumentality or agency thereof, (ii) by a State, territory, or possession of the United States, or the District of Columbia, or any political subdivision thereof, (iii) by a public benefit corporation— (I) which is exempt from taxation under section 501(c)(3), (II) which has assumed control over a State, county, or municipal hospital, and (III) whose employees have been deemed to be public employees under State law, (iv) by any educational organization described in section 170(b)(1)(A)(ii)— (I) pursuant to an agreement with any entity described in clause (i), (ii), or (iii) under which the funds from which the loan was made were provided to such educational organization, or (II) pursuant to a program of such educational organization which is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs and under which the services provided by the students (or former students) are for or under the direction of a governmental unit or an organization described in section 501(c)(3) and exempt from tax under section 501(a), or (v) by an educational organization described in section 170(b)(1)(A)(ii) or an organization exempt from tax under section 501(a)— (I) to refinance a loan that meets the requirements of clause (i), (ii), (iii), or (iv), or (II) to refinance a loan to an individual to assist the individual in attending any such educational organization, but only if the refinancing loan is pursuant to a program of the refinancing organization which is designed as described in clause (iv)(II). (C) Exception for discharges on account of services performed for certain lenders A discharge of a loan made by an organization described in subparagraph (B)(iv) does not meet the requirements of this paragraph if the discharge is on account of services performed for either such organization. . (c) Institution-Provided loan repayments Paragraph (3) of section 108(f) of the Internal Revenue Code of 1986 is amended to read as follows: (3) Institution-provided loan repayments A repayment meets the requirements of this paragraph if— (A) it is made by an organization described in section 501(c)(3) that is exempt from tax under section 501(a), (B) it is made pursuant to a program that repays all or a portion of the student loans of individuals on the condition that at the time of the repayment the individuals are working for or under the direction of a governmental unit or an organization described in section 501(c)(3) and exempt from tax under section 501(a), and (C) it is not made on account of services performed for the organization described in subparagraph (A). . (d) Certain other student loan forgiveness Subsection (f) of section 108 of the Internal Revenue Code of 1986 is amended— (1) by redesignating paragraph (4) as paragraph (5), and (2) by inserting after paragraph (3) the following new paragraph: (4) Certain other student loan forgiveness A discharge meets the requirements of this paragraph if it is made— (A) in the case of a loan made by the United States or an instrumentality or agency thereof, pursuant to— (i) an income-based repayment plan under section 493C of the Higher Education Act of 1965, or (ii) an income contingent repayment plan in accordance with section 455 of such Act, or (B) because of the death or disability of the student. . (e) Student loan Subsection (f) of section 108 of the Internal Revenue Code of 1986, as amended by subsection (d), is amended— (1) by redesignating paragraph (5) as paragraph (6), and (2) by inserting after paragraph (4) the following new paragraph: (5) Student loan For purposes of this subsection, the term student loan means any loan to an individual to assist the individual in attending an educational organization described in section 170(b)(1)(A)(ii). . (f) Conforming amendments (1) Section 127(c)(4) of the Internal Revenue Code of 1986, as added by this Act, is amended by striking means any loan and all that follows and inserting has the meaning given such term by section 108(f)(5). . (2) Sections 3121(a)(20), 3231(e)(5), 3306(b)(16), and 3401(a)(19) of such Code are each amended by striking 108(f)(4) and inserting 108(f)(6) . (g) Effective date The amendments made by this section shall apply to discharges of indebtedness after December 31, 2015. 204. Uniform definition of qualifying education expenses (a) Educational assistance programs Paragraph (1) of section 127(c) of the Internal Revenue Code of 1986 is amended— (1) by striking (including, but not limited to, tuition, fees, and similar payments, books, supplies, and equipment) in subparagraph (A) and inserting (including qualified tuition and related expenses, as defined in section 25A(f)(2)) , and (2) by striking the second sentence. (b) Qualified scholarships Paragraph (2) of section 117(b) of the Internal Revenue Code of 1986 is amended by striking means— and all that follows and inserting has the meaning given such term by section 25A(f)(2). . (c) Qualified tuition programs (1) Computer technology and equipment allowed as a qualified higher education expense for years before 2018 (A) In general Clause (iii) of section 529(e)(3)(A) of the Internal Revenue Code of 1986 is amended to read as follows: (iii) expenses for the purchase of computer or peripheral equipment (as defined in section 168(i)(2)(B)), computer software (as defined in section 197(e)(3)(B)), or Internet access and related services, if such equipment, software, or services are to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. . (B) Effective date The amendment made by this paragraph shall apply to taxable years beginning after December 31, 2015. (2) Permanent definition Paragraph (3) of section 529(e) of such Code, as amended by paragraph (1), is amended— (A) by striking subparagraph (A) and inserting the following new subparagraph: (A) In general Except as provided in subparagraph (B), the term qualified higher education expenses has the same meaning as the term qualified tuition and related expenses as defined in section 25A(f)(2). , (B) by striking section 25A(b)(3) in clause (i) of subparagraph (B) and inserting section 25A(f)(1) (not including any individual treated as an eligible student solely by reason of section 25A(g)(9)) , and (C) by striking such institution in clause (i) of subparagraph (B) and inserting an eligible educational institution . (d) Technical amendment Clause (iii) of section 530(b)(3)(A) of the Internal Revenue Code of 1986 is amended by striking (as defined in section 170(e)(6)(F)(i)) or and inserting described in section 25A(f)(2)(B) or any . (e) Repeal of deadwood (1) In general Part II of subchapter Y of chapter 1 of the Internal Revenue Code of 1986 is amended by striking section 1400O. (2) Clerical amendment The table of sections for part II of subchapter Y of chapter 1 of such Code is amended by striking the item relating to section 1400O. (f) Effective date Except as provided in subsection (d)(1)(B), the amendments made by this section shall apply to taxable years beginning after December 31, 2017. 205. Expansion of Pell Grant exclusion from gross income; treatment under Hope Scholarship and Lifetime Learning credits (a) In general Paragraph (1) of section 117(b) of the Internal Revenue Code of 1986 is amended by striking received by an individual and all that follows and inserting “received by an individual— (A) as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expenses, or (B) as a Federal Pell Grant under section 401 of the Higher Education Act of 1965 (as in effect on the date of the enactment of this subparagraph). . (b) Coordination with Hope Scholarship and Lifetime Learning credits Paragraph (2) of section 25A(g) of the Internal Revenue Code of 1986 is amended— (1) by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively, and by moving such clauses 2 ems to the right, (2) by striking etc .—The amount and inserting “ etc .— (A) In general The amount , and (3) by adding at the end the following new subparagraph: (B) Coordination with Pell Grants not used for qualified tuition and related expenses For purposes of subparagraph (A), the amount of any Federal Pell Grant under section 401 of the Higher Education Act of 1965 ( 20 U.S.C. 1070a ) shall be reduced (but not below zero) by the amount of expenses (other than qualified tuition and related expenses) which are taken into account in determining the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, as in effect on the date of the enactment of the Promoting Access and Retention Through New Efforts to Require Shared Higher Investments in Postsecondary Success Act ) of such individual at an eligible educational institution for the academic period for which the credit under subsection (a) is being determined. . (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2015. 206. Modifications to qualified tuition programs (a) Elimination of distribution aggregation requirements (1) In general Section 529(c)(3) of the Internal Revenue Code of 1986 is amended by striking subparagraph (D). (2) Effective date The amendment made by this subsection shall apply to distributions after December 31, 2015. (b) Recontribution of refunded amounts (1) In general Section 529(c)(3) of the Internal Revenue Code of 1986, as amended by subsection (a), is amended by adding at the end the following new subparagraph: (D) Special rule for contributions of refunded amounts In the case of a beneficiary who receives a refund of any qualified higher education expenses from an eligible educational institution, subparagraph (A) shall not apply to that portion of any distribution for the taxable year which is recontributed to a qualified tuition program of which such individual is a beneficiary, but only to the extent such recontribution is made not later than 60 days after the date of such refund and does not exceed the refunded amount. . (2) Effective date (A) In general The amendment made by this subsection shall apply with respect to refunds of qualified higher education expenses after December 31, 2015. (B) Transition rule In the case of a refund of qualified higher education expenses received after December 31, 2015, and before the date of the enactment of this Act (if later), section 529(c)(3)(D) of the Internal Revenue Code of 1986 (as added by this section) shall be applied by substituting not later than 60 days after the date of the enactment of this subparagraph for not later than 60 days after the date of such refund .