NAICU Washington Update

Higher Ed Tax Relief Bill Introduced in House

April 26, 2010

Rep. Brian Higgins (D-N.Y.) has introduced legislation extending and improving certain expiring higher education tax provisions, and providing additional tax relief for scholarship and grant recipients.  Joining Higgins as original cosponsors in this bipartisan effort are Reps. Peter Roskam (R-Ill.), Carolyn McCarthy (D-N.Y.), and  Todd Platts (R-Pa.).  Higgins and Roskam are members of the House Ways and Means Committee; McCarthy and Platts serve on the House Ed and Labor Committee.

H.R. 5078, the "Higher Education Affordability and Equity Act of 2010," introduced April 21, is based on legislation introduced in previous sessions of Congress by Rep. Phil English (R-Pa.) who has since retired. Specifically, the bill would:

  • Make permanent the improvements made to the Student Loan Interest Deduction in 2001 legislation (set to expire at the end of 2010), including the elimination of the five-year limit for claiming the deduction and increasing the income caps for eligibility.  H.R. 5078 also would allow the full amount of loan interest to be deductible; it is currently capped at $2,500 annually.
  • Make permanent the increased tax-free annual contribution limit to Coverdell Education Savings Accounts enacted in 2001 (also set to expire at the end of 2010).  The bill also would further increase that amount from $2,000 to $5,000 annually.
  • Restore pre-1986 tax treatment to scholarships and grants, allowing funds to be used for both tuition and room and board expenses tax-free.  Currently, funds are tax-free only if used for tuition expenses.

H.R. 5078 is the result of many months of hard work by the NAICU membership as the association works toward extending many important tax provisions that will be lost if Congress fails to renew them this year.  This bill  complements legislation introduced in the Senate last December by Sen. Charles Grassley (R-Iowa), making permanent a host of tax provisions important to independent higher education.

Ways and Means Chairman Sander Levin (D-Mich.) has indicated his interest in these items, and plans to hold a hearing sometime this summer on the importance of the higher education tax benefits.  NAICU has been invited to testify.

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