S 359 ISCommentsClose CommentsPermalink

To amend the Higher Education Act of 1965 to provide additional support to students.CommentsClose CommentsPermalink

January 22, 2007

Mr. KENNEDY (for himself, Ms. MIKULSKI, Mr. LIEBERMAN, Mr. SCHUMER, Mr. DURBIN, and Mr. OBAMA) introduced the following bill; which was read twice and referred to the Committee on FinanceCommentsClose CommentsPermalink

To amend the Higher Education Act of 1965 to provide additional support to students.CommentsClose CommentsPermalink

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,CommentsClose CommentsPermalink

SECTION 1. SHORT TITLE.

This Act may be cited as the `Student Debt Relief Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. INCREASE IN FEDERAL PELL GRANTS.

(a) Program Authority- Section 401(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1070a(a)(1)) is amended by striking `2004' and inserting `2012'.CommentsClose CommentsPermalink





(b) Amount of Grants- Section 401(b)(2)(A) of the Higher Education Act of 1965 (20 U.S.C. 1070a(b)(2)(A)) is amended by striking clauses (i) through (v) and inserting the following:CommentsClose CommentsPermalink





`(i) $5,100 for academic year 2007-2008;CommentsClose CommentsPermalink





`(ii) $5,400 for academic year 2008-2009;CommentsClose CommentsPermalink





`(iii) $5,700 for academic year 2009-2010;CommentsClose CommentsPermalink





`(iv) $6,000 for academic year 2010-2011; andCommentsClose CommentsPermalink





`(v) $6,300 for academic year 2011-2012,'.CommentsClose CommentsPermalink





(c) Additional Funds-CommentsClose CommentsPermalink





(1) IN GENERAL- For an academic year, there are authorized to be appropriated, and there are appropriated, to carry out paragraph (2) (in addition to any other amounts appropriated to carry out section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) and out of any money in the Treasury not otherwise appropriated) as follows:CommentsClose CommentsPermalink





(A) For academic year 2007-2008, $4,331,000,000.CommentsClose CommentsPermalink





(B) For academic year 2008-2009, $5,674,000,000.CommentsClose CommentsPermalink





(C) For academic year 2009-2010, $7,050,000,000.CommentsClose CommentsPermalink





(D) For academic year 2010-2011, $8,452,000,000.CommentsClose CommentsPermalink





(E) For academic year 2011-2012, $9,894,000,000.CommentsClose CommentsPermalink





(2) INCREASE IN PELL GRANTS- The amounts made available pursuant to paragraph (1) shall be used to increase the amount of the maximum Federal Pell Grant under section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a) for which funds are appropriated under appropriations Acts for a fiscal year by--CommentsClose CommentsPermalink





(A) $1,050 for award year 2007-2008;CommentsClose CommentsPermalink





(B) $1,350 for award year 2008-2009;CommentsClose CommentsPermalink





(C) $1,650 for award year 2009-2010;CommentsClose CommentsPermalink





(D) $1,950 for award year 2010-2011; andCommentsClose CommentsPermalink





(E) $2,250 for award year 2011-2012.CommentsClose CommentsPermalink

SEC. 3. STUDENT AID REWARD PROGRAM.

Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is amended by inserting after section 489 the following:CommentsClose CommentsPermalink

`SEC. 489A. STUDENT AID REWARD PROGRAM.

`(a) Program Authorized- The Secretary shall carry out a Student Aid Reward Program to encourage institutions of higher education to participate in the student loan program under this title that is most cost-effective for taxpayers.CommentsClose CommentsPermalink





`(b) Program Requirements- In carrying out the Student Aid Reward Program, the Secretary shall--CommentsClose CommentsPermalink





`(1) provide to each institution of higher education participating in the student loan program under this title that is most cost-effective for taxpayers, a Student Aid Reward Payment, in an amount determined in accordance with subsection (c), to encourage the institution to participate in that student loan program;CommentsClose CommentsPermalink





`(2) require each institution of higher education receiving a payment under this section to provide student loans under such student loan program for a period of 5 years after the date the first payment is made under this section;CommentsClose CommentsPermalink





`(3) where appropriate, require that funds paid to institutions of higher education under this section be used to award students a supplement to such students' Federal Pell Grants under subpart 1 of part A;CommentsClose CommentsPermalink





`(4) permit such funds to also be used to award need-based grants to lower- and middle-income graduate students; andCommentsClose CommentsPermalink





`(5) encourage all institutions of higher education to participate in the Student Aid Reward Program under this section.CommentsClose CommentsPermalink





`(c) Amount- The amount of a Student Aid Reward Payment under this section shall be not less than 50 percent of the savings to the Federal Government generated by the institution of higher education's participation in the student loan program under this title that is most cost-effective for taxpayers instead of the institution's participation in the student loan program that is not most cost-effective for taxpayers.CommentsClose CommentsPermalink





`(d) Trigger To Ensure Cost Neutrality-CommentsClose CommentsPermalink





`(1) LIMIT TO ENSURE COST NEUTRALITY- Notwithstanding subsection (c), the Secretary shall not distribute Student Aid Reward Payments under the Student Aid Reward Program that, in the aggregate, exceed the Federal savings resulting from the implementation of the Student Aid Reward Program.CommentsClose CommentsPermalink





`(2) FEDERAL SAVINGS- In calculating Federal savings, as used in paragraph (1), the Secretary shall determine Federal savings on loans made to students at institutions of higher education that participate in the student loan program under this title that is most cost-effective for taxpayers and that, on the date of enactment of this section, participated in the student loan program that is not most cost-effective for taxpayers, resulting from the difference of--CommentsClose CommentsPermalink





`(A) the Federal cost of loan volume made under the student loan program under this title that is most cost-effective for taxpayers; andCommentsClose CommentsPermalink





`(B) the Federal cost of an equivalent type and amount of loan volume made, insured, or guaranteed under the student loan program under this title that is not most cost-effective for taxpayers.CommentsClose CommentsPermalink





`(3) DISTRIBUTION RULES- If the Federal savings determined under paragraph (2) is not sufficient to distribute full Student Aid Reward Payments under the Student Aid Reward Program, the Secretary shall--CommentsClose CommentsPermalink





`(A) first make Student Aid Reward Payments to those institutions of higher education that participated in the student loan program under this title that is not most cost-effective for taxpayers on the date of enactment of this section; andCommentsClose CommentsPermalink





`(B) with any remaining Federal savings after making Student Aid Reward Payments under subparagraph (A), make Student Aid Reward Payments to the institutions of higher education eligible for a Student Aid Reward Payment and not described in subparagraph (A) on a pro-rata basis.CommentsClose CommentsPermalink





`(4) DISTRIBUTION TO STUDENTS- Any institution of higher education that receives a Student Aid Reward Payment under this section--CommentsClose CommentsPermalink





`(A) shall distribute, where appropriate, part or all of such payment among the students of such institution who are Federal Pell Grant recipients by awarding such students a supplemental grant; andCommentsClose CommentsPermalink





`(B) may distribute part of such payment as a supplemental grant to graduate students in financial need.CommentsClose CommentsPermalink





`(5) ESTIMATES, ADJUSTMENTS, AND CARRY OVER-CommentsClose CommentsPermalink





`(A) ESTIMATES AND ADJUSTMENTS- The Secretary shall make Student Aid Reward Payments to institutions of higher education on the basis of estimates, using the best data available at the beginning of an academic or fiscal year. If the Secretary determines thereafter that loan program costs for that academic or fiscal year were different than such estimate, the Secretary shall adjust by reducing or increasing subsequent Student Aid Reward Payments rewards paid to such institutions of higher education to reflect such difference.CommentsClose CommentsPermalink





`(B) CARRY OVER- Any institution of higher education that receives a reduced Student Aid Reward Payment under paragraph (3)(B), shall remain eligible for the unpaid portion of such institution's financial reward payment, as well as any additional financial reward payments for which the institution is otherwise eligible, in subsequent academic or fiscal years.CommentsClose CommentsPermalink





`(e) Definition- In this section:CommentsClose CommentsPermalink





`(1) STUDENT LOAN PROGRAM UNDER THIS TITLE THAT IS MOST COST-EFFECTIVE FOR TAXPAYERS- The term `student loan program under this title that is most cost-effective for taxpayers' means the loan program under part B or D of this title that has the lowest overall cost to the Federal Government (including administrative costs) for the loans authorized by such parts.CommentsClose CommentsPermalink





`(2) STUDENT LOAN PROGRAM UNDER THIS TITLE THAT IS NOT MOST COST-EFFECTIVE FOR TAXPAYERS- The term `student loan program under this title that is not most cost-effective for taxpayers' means the loan program under part B or D of this title that does not have the lowest overall cost to the Federal Government (including administrative costs) for the loans authorized by such parts.'.CommentsClose CommentsPermalink

SEC. 4. INTEREST RATE REDUCTIONS.

(a) FFEL Interest Rates-CommentsClose CommentsPermalink





(1) Section 427A(l) of the Higher Education Act of 1965 (20 U.S.C. 1077a(l)) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(4) REDUCED RATES FOR UNDERGRADUATE SUBSIDIZED LOANS- Notwithstanding subsection (h) and paragraph (1) of this subsection, with respect to any loan to an undergraduate student made, insured, or guaranteed under this part (other than a loan made pursuant to section 428B, 428C, or 428H) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2012, the applicable rate of interest shall be as follows:CommentsClose CommentsPermalink





`(A) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2007, 6.8 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(B) For a loan for which the first disbursement is made on or after July 1, 2007, and before July 1, 2008, 6.12 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(C) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 5.44 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(D) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 4.76 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(E) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.08 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(F) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2012, 3.40 percent on the unpaid principal balance of the loan.'.CommentsClose CommentsPermalink





(2) SPECIAL ALLOWANCE CROSS REFERENCE- Section 438(b)(2)(I)(ii)(II) of such Act is amended by striking `section 427A(l)(1)' and inserting `section 427A(l)(1) or (l)(4)'.CommentsClose CommentsPermalink





(b) Direct Loan Interest Rates- Section 455(b)(7) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)(7)) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(D) REDUCED RATES FOR UNDERGRADUATE FDSL- Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans made to undergraduate students for which the first disbursement is made on or after July 1, 2006, and before July 1, 2012, the applicable rate of interest shall be as follows:CommentsClose CommentsPermalink





`(i) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2007, 6.8 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(ii) For a loan for which the first disbursement is made on or after July 1, 2007, and before July 1, 2008, 6.12 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(iii) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 5.44 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(iv) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 4.76 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(v) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.08 percent on the unpaid principal balance of the loan.CommentsClose CommentsPermalink





`(vi) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2012, 3.40 percent on the unpaid principal balance of the loan.'.CommentsClose CommentsPermalink

SEC. 5. INCOME CONTINGENT REPAYMENT FOR PUBLIC SECTOR EMPLOYEES.

Section 455(e) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(7) REPAYMENT PLAN FOR PUBLIC SECTOR EMPLOYEES-CommentsClose CommentsPermalink





`(A) IN GENERAL- The Secretary shall forgive the balance due on any loan made under this part or section 428C(b)(5) for a borrower--CommentsClose CommentsPermalink





`(i) who has made 120 payments on such loan pursuant to income contingent repayment; andCommentsClose CommentsPermalink





`(ii) who is employed, and was employed for the 10-year period in which the borrower made the 120 payments described in clause (i), in a public sector job.CommentsClose CommentsPermalink





`(B) PUBLIC SECTOR JOB- In this paragraph, the term `public sector job' means a full-time job in emergency management, government, public safety, law enforcement, public health, education (including early childhood education), social work in a public child or family service agency, or public interest legal services (including prosecution or public defense).CommentsClose CommentsPermalink





`(8) RETURN TO STANDARD REPAYMENT- A borrower who is repaying a loan made under this part pursuant to income contingent repayment may choose, at any time, to terminate repayment pursuant to income contingent repayment and repay such loan under the standard repayment plan.'.CommentsClose CommentsPermalink

SEC. 6. FAIR PAYMENT ASSURANCE.

(a) Amendment- Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is further amended by adding at the end the following:CommentsClose CommentsPermalink

`SEC. 493C. FAIR PAYMENT ASSURANCE.

`(a) Definitions- In this section:CommentsClose CommentsPermalink





`(1) EXCEPTED PLUS LOAN- The term `excepted PLUS loan' means a loan under section 428B, or a Federal Direct PLUS Loan, that is made, insured, or guaranteed on behalf of a dependent student.CommentsClose CommentsPermalink





`(2) PARTIAL FINANCIAL HARDSHIP- The term `partial financial hardship' means the amount by which the annual amount due on the total amount of loans made, insured, or guaranteed under part B or D (other than an excepted PLUS loan) to a borrower as calculated under the standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A) exceeds 15 percent of the result obtained by calculating the amount by which--CommentsClose CommentsPermalink





`(A) the borrower's adjusted gross income; exceedsCommentsClose CommentsPermalink





`(B) 150 percent of the poverty line applicable to the borrower's family size as determined under section 673(2) of the Community Services Block Grant Act.CommentsClose CommentsPermalink





`(b) Fair Payment Assurance Program Authorized- Notwithstanding any other provision of this Act, the Secretary shall carry out a program under which--CommentsClose CommentsPermalink





`(1) a borrower of any loan made, insured or guaranteed under part B or D (other than an excepted PLUS loan) who has a partial financial hardship may elect, during any period the borrower has the partial financial hardship, to have the borrower's aggregate monthly payment for all such loans not exceed 15 percent of the result described in subsection (a)(2) divided by 12;CommentsClose CommentsPermalink





`(2) the holder of such a loan shall apply the borrower's monthly payment under this subsection first toward interest due on the loan and then toward the principal of the loan;CommentsClose CommentsPermalink





`(3) any interest due and not paid under paragraph (2)--CommentsClose CommentsPermalink





`(A) in the case of a Federal Stafford Loan or Federal Direct Stafford Loan, shall be paid by the Secretary; orCommentsClose CommentsPermalink





`(B) in the case of any other loan under part B or D (other than a loan described in subparagraph (A) or an excepted PLUS loan), shall be capitalized;CommentsClose CommentsPermalink





`(4) any principal due and not paid under paragraph (2) shall be deferred in the same manner as deferments under section 428(b)(1)(M);CommentsClose CommentsPermalink





`(5) the amount of time the borrower makes monthly payments under paragraph (1) may exceed 10 years;CommentsClose CommentsPermalink





`(6) if the borrower no longer has a partial financial hardship or no longer wishes to continue the election under this subsection, then--CommentsClose CommentsPermalink





`(A) the maximum monthly payment required to be paid for all loans made to the borrower under part B or D (other than an excepted PLUS loan) shall not exceed the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A) when the borrower first made the election described in this subsection; andCommentsClose CommentsPermalink





`(B) the amount of time the borrower is permitted to repay such loans may exceed 10 years; andCommentsClose CommentsPermalink





`(7) the Secretary shall repay or cancel any outstanding balance of principal and interest due on all loans made under part B or D (other than an excepted PLUS Loan) to a borrower who--CommentsClose CommentsPermalink





`(A) is in deferment due to an economic hardship described in section 435(o) for a period of time prescribed by the Secretary, not to exceed 25 years; orCommentsClose CommentsPermalink





`(B)(i) makes the election under this subsection; andCommentsClose CommentsPermalink





`(ii) for a period of time prescribed by the Secretary, not to exceed 25 years (including any period during which the borrower is in deferment due to an economic hardship described in section 435(o)), meets any 1 or more of the following requirements:CommentsClose CommentsPermalink





`(I) Has made reduced monthly payments under paragraph (1).CommentsClose CommentsPermalink





`(II) Has made monthly payments of not less than the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A) when the borrower first made the election described in this subsection.CommentsClose CommentsPermalink





`(III) Has made payments under a standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A).CommentsClose CommentsPermalink





`(IV) Has made payments under an income contingent repayment plan under section 455(d)(1)(D).'.CommentsClose CommentsPermalink





(b) Conforming ICR Amendment- Section 455(d)(1)(D) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)(1)(D)) is amended by inserting `made on behalf of a dependent student' after `PLUS loan'.CommentsClose CommentsPermalink

SEC. 7. DEFINITION OF ECONOMIC HARDSHIP.

Section 435(o) of the Higher Education Act of 1965 (20 U.S.C. 1085(o)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1)--CommentsClose CommentsPermalink





(A) in subparagraph (A)(ii), by striking `100 percent of the poverty line for a family of 2' and inserting `150 percent of the poverty line applicable to the borrower's family size';CommentsClose CommentsPermalink





(B) by striking subparagraph (B); andCommentsClose CommentsPermalink





(C) by redesignating subparagraph (C) as subparagraph (B); andCommentsClose CommentsPermalink





(2) in paragraph (2), by striking `(1)(C)' and inserting `(1)(B)'.CommentsClose CommentsPermalink

SEC. 8. DEFERRALS.

(a) FISL- Section 427(a)(2)(C)(iii) of the Higher Education Act of 1965 (20 U.S.C. 1077(a)(2)(C)(iii)) is amended by striking `not in excess of 3 years'.CommentsClose CommentsPermalink





(b) Interest Subsidies- Section 428(b)(1)(M)(iv) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)(iv)) is amended by striking `not in excess of 3 years'.CommentsClose CommentsPermalink





(c) Direct Loans- Section 455(f)(2)(D) of the Higher Education Act of 1965 (20 U.S.C. 1087e(f)(2)(D)) is amended by striking `not in excess of 3 years'.CommentsClose CommentsPermalink





(d) Perkins- Section 464(c)(2)(A)(iv) of the Higher Education Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)(iv)) is amended by striking `not in excess of 3 years'.CommentsClose CommentsPermalink

SEC. 9. MAXIMUM REPAYMENT PERIOD.

(a) In General- Section 455(e) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the end the following:CommentsClose CommentsPermalink





`(7) MAXIMUM REPAYMENT PERIOD- In calculating the extended period of time for which an income contingent repayment plan under this subsection may be in effect for a borrower, the Secretary shall include all time periods during which a borrower of loans under part B, part D, or part E--CommentsClose CommentsPermalink





`(A) is not in default on any loan that is included in the income contingent repayment plan; andCommentsClose CommentsPermalink





`(B)(i) is in deferment due to an economic hardship described in section 435(o);CommentsClose CommentsPermalink





`(ii) makes monthly payments under paragraph (1) or (6) of section 493C(b); orCommentsClose CommentsPermalink





`(iii) makes payments under a standard repayment plan described in section 428(b)(9)(A)(i) or subsection (d)(1)(A).'.CommentsClose CommentsPermalink





(b) Technical Correction- Section 455(d)(1)(C) (20 U.S.C. 1087e(d)(1)(C)) is amended by striking `428(b)(9)(A)(v)' and inserting `428(b)(9)(A)(iv)'.CommentsClose CommentsPermalink

SEC. 10. IN-SCHOOL CONSOLIDATION.

Section 428(b)(7)(A) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(7)(A)) is amended by striking `shall begin' and all that follows through the period and inserting `shall begin--CommentsClose CommentsPermalink





`(i) the day after 6 months after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); orCommentsClose CommentsPermalink





`(ii) on an earlier date if the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier date.'.CommentsClose CommentsPermalink

SEC. 11. CONSOLIDATION LOAN CHANGES.

Section 428C(a)(3) of the Higher Education Act of 1965 (20 U.S.C. 1078-3(a)(3)) is amended to read as follows:CommentsClose CommentsPermalink





`(3) DEFINITION OF ELIGIBLE BORROWER- For the purpose of this section, the term `eligible borrower' means a borrower who--CommentsClose CommentsPermalink





`(A) is not subject to a judgment secured through litigation with respect to a loan under this title or to an order for wage garnishment under section 488A; andCommentsClose CommentsPermalink





`(B) at the time of application for a consolidation loan--CommentsClose CommentsPermalink





`(i) is in repayment status as determined under section 428(b)(7)(A);CommentsClose CommentsPermalink





`(ii) is in a grace period preceding repayment; orCommentsClose CommentsPermalink





`(iii) is a defaulted borrower who has made arrangements to repay the obligation on the defaulted loans satisfactory to the holders of the defaulted loans.'.CommentsClose CommentsPermalink

SEC. 12. REDUCTION OF DIRECT LOAN ORIGINATION FEES.

Section 455(c) of the Higher Education Act of 1965 (20 U.S.C. 1087e(c)) is amended--CommentsClose CommentsPermalink





(1) in paragraph (1)--CommentsClose CommentsPermalink





(A) by striking `4.0 percent' and inserting `3.0 percent'; andCommentsClose CommentsPermalink





(B) by striking `shall' and inserting `is authorized to'; andCommentsClose CommentsPermalink





(2) in paragraph (2)--CommentsClose CommentsPermalink





(A) in subparagraph (A), by striking `3.0 percent' for `4.0 percent' and inserting `2.0 percent' for `3.0 percent';CommentsClose CommentsPermalink





(B) in subparagraph (B), by striking `2.5 percent' for `4.0 percent' and inserting `1.5 percent' for `3.0 percent';CommentsClose CommentsPermalink





(C) in subparagraph (C), by striking `2.0 percent' for `4.0 percent' and inserting `1.0 percent' for `3.0 percent';CommentsClose CommentsPermalink





(D) in subparagraph (D), by striking `1.5 percent' for `4.0 percent' and inserting `0.5 percent' for `3.0 percent'; andCommentsClose CommentsPermalink





(E) in subparagraph (E), by striking `1.0 percent' for `4.0 percent' and inserting `0.0 percent' for `3.0 percent'.CommentsClose CommentsPermalink

SEC. 13. ADMINISTRATIVE ACCOUNT FOR DIRECT LOAN PROGRAM.

Section 458 of the Higher Education Act of 1965 (20 U.S.C. 1087h) is amended--CommentsClose CommentsPermalink





(1) in subsection (a)--CommentsClose CommentsPermalink





(A) by striking paragraphs (2) and (3) and inserting the following:CommentsClose CommentsPermalink





`(2) MANDATORY FUNDS FOR FISCAL YEARS 2007 THROUGH 2011- Each fiscal year there shall be available to the Secretary, from funds not otherwise appropriated, funds to be obligated for--CommentsClose CommentsPermalink





`(A) administrative costs under this part and part B, including the costs of the direct student loan programs under this part; andCommentsClose CommentsPermalink





`(B) account maintenance fees payable to guaranty agencies under part B and calculated in accordance with subsection (b),CommentsClose CommentsPermalink





not to exceed (from such funds not otherwise appropriated) $904,000,000 (less any amounts previously appropriated for the costs and fees described this paragraph for fiscal year 2007) for fiscal year 2007, $943,000,000 for fiscal year 2008, $983,000,000 for fiscal year 2009, $1,023,000,000 for fiscal year 2010, $1,064,000,000 for fiscal year 2011, and $1,106,000,000 for fiscal year 2012.';CommentsClose CommentsPermalink





(B) by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively; andCommentsClose CommentsPermalink





(C) in paragraph (3) (as redesignated in subparagraph (B)), by striking `paragraph (3)' and inserting `paragraph (2)'; andCommentsClose CommentsPermalink





(2) in subsection (b), by striking `(a)(3)' and inserting `(a)(2)'.CommentsClose CommentsPermalink

SEC. 14. COLLEGE TUITION DEDUCTION AND CREDIT FOR INTEREST ON HIGHER EDUCATION LOANS.

(a) Expansion of Deduction for Higher Education Expenses-CommentsClose CommentsPermalink





(1) AMOUNT OF DEDUCTION- Subsection (b) of section 222 of the Internal Revenue Code of 1986 (relating to deduction for qualified tuition and related expenses) is amended to read as follows:CommentsClose CommentsPermalink





`(b) Limitations-CommentsClose CommentsPermalink





`(1) DOLLAR LIMITATIONS-CommentsClose CommentsPermalink





`(A) IN GENERAL- Except as provided in paragraph (2), the amount allowed as a deduction under subsection (a) with respect to the taxpayer for any taxable year shall not exceed the applicable dollar limit.CommentsClose CommentsPermalink





`(B) APPLICABLE DOLLAR LIMIT- The applicable dollar limit for any taxable year shall be determined as follows:CommentsClose CommentsPermalink

$8,000CommentsClose CommentsPermalink

$12,000.CommentsClose CommentsPermalink

`(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME-CommentsClose CommentsPermalink





`(A) IN GENERAL- The amount which would (but for this paragraph) be taken into account under subsection (a) shall be reduced (but not below zero) by the amount determined under subparagraph (B).CommentsClose CommentsPermalink





`(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 account as--CommentsClose CommentsPermalink





`(i) the excess of--CommentsClose CommentsPermalink





`(I) the taxpayer's modified adjusted gross income for such taxable year, overCommentsClose CommentsPermalink





`(II) $65,000 ($130,000 in the case of a joint return), bears toCommentsClose CommentsPermalink





`(ii) $15,000 ($30,000 in the case of a joint return).CommentsClose CommentsPermalink





`(C) MODIFIED ADJUSTED GROSS INCOME- For purposes of this paragraph, the term `modified adjusted gross income' means the adjusted gross income of the taxpayer for the taxable year determined--CommentsClose CommentsPermalink





`(i) without regard to this section and sections 199, 911, 931, and 933, andCommentsClose CommentsPermalink





`(ii) after the application of sections 86, 135, 137, 219, 221, and 469.CommentsClose CommentsPermalink





For purposes of the sections referred to in clause (ii), adjusted gross income shall be determined without regard to the deduction allowed under this section.CommentsClose CommentsPermalink





`(D) INFLATION ADJUSTMENTS-CommentsClose CommentsPermalink





`(i) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2007, both of the dollar amounts in subparagraph (B)(i)(II) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(I) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting `calendar year 2006' for `calendar year 1992' in subparagraph (B) thereof.CommentsClose CommentsPermalink





`(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.'.CommentsClose CommentsPermalink





(2) QUALIFIED TUITION AND RELATED EXPENSES OF ELIGIBLE STUDENTS-CommentsClose CommentsPermalink





(A) IN GENERAL- Section 222(a) of the Internal Revenue Code of 1986 (relating to allowance of deduction) is amended by inserting `of eligible students' after `expenses'.CommentsClose CommentsPermalink





(B) DEFINITION OF ELIGIBLE STUDENT- Section 222(d) of such Code (relating to definitions and special rules) is amended by redesignating paragraphs (2) through (6) as paragraphs (3) through (7), respectively, and by inserting after paragraph (1) the following new paragraph:CommentsClose CommentsPermalink





`(2) ELIGIBLE STUDENT- The term `eligible student' has the meaning given such term by section 25A(b)(3).'.CommentsClose CommentsPermalink





(3) DEDUCTION MADE PERMANENT- Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 (relating to sunset of provisions of such Act) shall not apply to the amendments made by section 431 of such Act.CommentsClose CommentsPermalink





(4) EFFECTIVE DATE- The amendments made by this subsection shall apply to payments made in taxable years beginning after December 31, 2006.CommentsClose CommentsPermalink





(b) Credit for Interest on Higher Education Loans-CommentsClose CommentsPermalink





(1) 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 25D the following new section:CommentsClose CommentsPermalink

`SEC. 25E. INTEREST ON HIGHER 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 the interest paid by the taxpayer during the taxable year on any qualified education loan.CommentsClose CommentsPermalink





`(b) Maximum Credit-CommentsClose CommentsPermalink





`(1) IN GENERAL- Except as provided in paragraph (2), the credit allowed by subsection (a) for the taxable year shall not exceed $1,500.CommentsClose CommentsPermalink





`(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME-CommentsClose CommentsPermalink





`(A) IN GENERAL- If the modified adjusted gross income of the taxpayer for the taxable year exceeds $50,000 ($100,000 in the case of a joint return), the amount which would (but for this paragraph) be allowable as a credit under this section shall be reduced (but not below zero) by the amount which bears the same ratio to the amount which would be so allowable as such excess bears to $20,000 ($40,000 in the case of a joint return).CommentsClose CommentsPermalink





`(B) MODIFIED ADJUSTED GROSS INCOME- The term `modified adjusted gross income' means adjusted gross income determined without regard to sections 199, 222, 911, 931, and 933.CommentsClose CommentsPermalink





`(C) INFLATION ADJUSTMENT- In the case of any taxable year beginning after 2007, the $50,000 and $100,000 amounts referred to in subparagraph (A) shall be increased by an amount equal to--CommentsClose CommentsPermalink





`(i) such dollar amount, multiplied byCommentsClose CommentsPermalink





`(ii) the cost-of-living adjustment determined under section (1)(f)(3) for the calendar year in which the taxable year begins, by substituting `2006' for `1992'.CommentsClose CommentsPermalink





`(D) ROUNDING- If any amount as adjusted under subparagraph (C) is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50.CommentsClose CommentsPermalink





`(c) Dependents Not 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.CommentsClose CommentsPermalink





`(d) Limit on Period Credit Allowed- A credit shall be allowed under this section only with respect to interest paid on any qualified education loan during the first 60 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.CommentsClose CommentsPermalink





`(e) Definitions- For purposes of this section--CommentsClose CommentsPermalink





`(1) QUALIFIED EDUCATION LOAN- The term `qualified education loan' has the meaning given such term by section 221(d)(1).CommentsClose CommentsPermalink





`(2) DEPENDENT- The term `dependent' has the meaning given such term by section 152.CommentsClose CommentsPermalink





`(f) Special Rules-CommentsClose CommentsPermalink





`(1) DENIAL OF DOUBLE BENEFIT- No credit shall be allowed under this section for any amount taken into account for any deduction under any other provision of this chapter.CommentsClose CommentsPermalink





`(2) MARRIED COUPLES MUST FILE JOINT RETURN- If the taxpayer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and the taxpayer's spouse file a joint return for the taxable year.CommentsClose CommentsPermalink





`(3) MARITAL STATUS- Marital status shall be determined in accordance with section 7703.'.CommentsClose CommentsPermalink





(2) CONFORMING AMENDMENT- 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 inserting after the item relating to section 25D the following new item:CommentsClose CommentsPermalink





`Sec. 25E. Interest on higher education loans.'.CommentsClose CommentsPermalink





(3) EFFECTIVE DATE- The amendments made by this section shall apply to any qualified education loan (as defined in section 25E(e)(1) of the Internal Revenue Code of 1986, as added by this section) incurred on, before, or after the date of the enactment of this Act, but only with respect to any loan interest payment due after December 31, 2006.CommentsClose CommentsPermalink