SECTION 1. CREDIT FOR INTEREST ON EDUCATION LOANS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to nonrefundable 
personal credits) is amended by inserting after section 22 the 
following new section:

``SEC. 23. INTEREST ON EDUCATION LOANS.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to 15 percent of the interest paid 
by the taxpayer during the taxable year on any qualified education 
loan.
    ``(b) Maximum Credit.--The credit allowed by subsection (a) for the 
taxable year shall not exceed $300.
    ``(c) Limitation on Taxpayers Eligible for Credit.--No credit shall 
be allowed by this section to an individual for the taxable year if a 
deduction under section 151 with respect to such individual is allowed 
to another taxpayer for the taxable year beginning in the calendar year 
in which such individual's taxable year begins.
    ``(d) Limit on Period Credit Allowed.--
            ``(1) Taxpayer and taxpayer's spouse.--Except as provided 
        in paragraph (2), a credit shall be allowed under this section 
        only with respect to interest paid on any qualified education 
        loan during the first 48 months (whether or not consecutive) in 
        which interest payments are required. For purposes of this 
        paragraph, any loan and all refinancings of such loan shall be 
        treated as 1 loan.
            ``(2) Dependent.--If the qualified education loan was used 
        to pay education expenses of an individual other than the 
        taxpayer or the taxpayer's spouse, a credit shall be allowed 
        under this section for any taxable year with respect to such 
        loan only if--
                    ``(A) a deduction under section 151 with respect to 
                such individual is allowed to the taxpayer for such 
                taxable year, and
                    ``(B) such individual is at least a half-time 
                student with respect to such taxable year.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Qualified education loan.--The term `qualified 
        education loan' means any indebtedness incurred to pay 
        qualified higher education expenses--
                    ``(A) which are incurred on behalf of the taxpayer, 
                the taxpayer's spouse, or a dependent of the taxpayer,
                    ``(B) which are paid or incurred within a 
                reasonable period of time before or after the 
                indebtedness is incurred, and
                    ``(C) which are attributable to education furnished 
                during a period during which the recipient was at least 
                a half-time student.
        Such term includes indebtedness used to refinance indebtedness 
        which qualifies as a qualified education loan. The term 
        `qualified education loan' shall not include any indebtedness 
        owed to a person who is related (within the meaning of section 
        267(b) or 707(b)(1)) to the taxpayer.
            ``(2) Qualified higher education expenses.--The term 
        `qualified higher education expenses' means the cost of 
        attendance (as defined in section 472 of the Higher Education 
        Act of 1965, 20 U.S.C. 1087ll, as in effect on the day before 
        the date of the enactment of this Act) of the taxpayer, the 
        taxpayer's spouse, or a dependent of the taxpayer at an 
        eligible educational institution. For purposes of the preceding 
        sentence, the term `eligible educational institution' has the 
        same meaning given such term by section 135(c)(3), except that 
        such term shall also include an institution conducting an 
        internship or residency program leading to a degree or 
        certificate awarded by an institution of higher education, a 
        hospital, or a health care facility which offers postgraduate 
        training.
            ``(3) Half-time student.--The term `half-time student' 
        means any individual who would be a student as defined in 
        section 151(c)(4) if `half-time' were substituted for `full-
        time' each place it appears in such section.
            ``(4) Dependent.--The term `dependent' has the meaning 
        given such term by section 152.
    ``(f) Special Rules.--
            ``(1) Denial of double benefit.--No credit shall be allowed 
        under this section for any amount for which a deduction is 
        allowable under any other provision of this chapter.
            ``(2) Marital status.--Marital status shall be determined 
        in accordance with section 7703.''
    (b) Optional Deduction for Interest on Education Loans.--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 
subparagraph (D), by redesignating subparagraph (E) as subparagraph 
(F), and by inserting after subparagraph (D) the following new 
subparagraph:
                    ``(E) any interest paid on a qualified education 
                loan (as defined in section 23(e)) during the period 
                described in section 23(d), unless a credit or 
                deduction is taken with respect to such interest under 
                any other provisions of this chapter, and''.
    (c) Clerical Amendment.--The table of sections for such subpart A 
is amended by inserting after the item relating to section 22 the 
following new item:

                              ``Sec. 23. Interest on education loans.''
    (d) Effective Date.--The amendments made by this section shall 
apply to any qualified education loan (as defined in section 23(e) of 
the Internal Revenue Code of 1986, as added by this section) incurred 
on, before, or after July 1, 1993, but only with respect to any loan 
interest payment due after June 30, 1993, and before the termination of 
the period described in section 23(d)(1) of such Code.
Output: Amends the Internal Revenue Code to allow a tax credit for interest paid or incurred on any qualified education loan during the first 48 months (whether or not consecutive) for which interest payments are required to be made.  Limits such credit to $300. 
Allows such tax credit to parents only if the dependent is a student and a personal exemption is claimed for such dependent student. 
Excludes interest paid on education loans from the definition of "personal interest" (thus, allowing a deduction to be taken) unless a credit or deduction with respect to such interest is taken.