text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Higher Education Investment Act of 
  1995''.
  
  SEC. 2. 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 20 percent of the interest paid 
  by the taxpayer during the taxable year on any qualified education 
  loan.
      ``(b) Maximum Credit.--
              ``(1) In general.--Except as provided in paragraph (2), the 
          credit allowed by subsection (a) for the taxable year shall not 
          exceed $500 ($1,000 in the case of 2 or more individuals with 
          qualified higher education expenses paid by any qualified 
          education loan).
              ``(2) Limitation based on modified adjusted gross income.--
                      ``(A) In general.--If the modified adjusted gross 
                  income of the taxpayer for the taxable year exceeds 
                  $40,000 ($60,000 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 $15,000.
                      ``(B) Modified adjusted gross income.--The term 
                  `modified adjusted gross income' means adjusted gross 
                  income determined--
                              ``(i) without regard to sections 135, 911, 
                          931, and 933, and
                              ``(ii) after application of sections 86, 
                          219, and 469.
                      ``(C) Inflation adjustment.--In the case of any 
                  taxable year beginning after 1996, the $40,000 and 
                  $60,000 amounts referred to in subparagraph (A) 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, 
                          except that subparagraph (B) of subsection 
                          (1)(f)(3) shall be applied by substituting 
                          `1995' for `1992'.
                      ``(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 (or, if 
                  such amount is a multiple of $25, such amount shall be 
                  rounded to the next highest multiple of $50).
      ``(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 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.
              ``(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) 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.
              ``(3) Marital status.--Marital status shall be determined 
          in accordance with section 7703.''
      (b) Reporting Requirement.--
              (1) In general.--Subpart B of part III of subchapter A of 
          chapter 61 of the Internal Revenue Code of 1986 (relating to 
          information concerning transactions with other persons) is 
          amended by inserting after section 6050P the following new 
          section:
  
  ``SEC. 6050Q. RETURNS RELATING TO EDUCATION LOAN INTEREST RECEIVED IN 
                TRADE OR BUSINESS FROM INDIVIDUALS.
  
      ``(a) Education Loan Interest of $600 or More.--Any person--
              ``(1) who is engaged in a trade or business, and
              ``(2) who, in the course of such trade or business, 
          receives from any individual interest aggregating $600 or more 
          for any calendar year on any qualified education loan,
  shall make the return described in subsection (b) with respect to each 
  individual from whom such interest was received at such time as the 
  Secretary may by regulations prescribe.
      ``(b) Form and Manner of Returns.--A return is described in this 
  subsection if such return--
              ``(1) is in such form as the Secretary may prescribe,
              ``(2) contains--
                      ``(A) the name and address of the individual from 
                  whom the interest described in subsection (a)(2) was 
                  received,
                      ``(B) the amount of such interest received for the 
                  calendar year, and
                      ``(C) such other information as the Secretary may 
                  prescribe.
      ``(c) Application to Governmental Units.--For purposes of 
  subsection (a):
              ``(1) Treated as persons.--The term `person' includes any 
          governmental unit (and any agency or instrumentality thereof).
              ``(2) Special rules.--In the case of a governmental unit or 
          any agency or instrumentality thereof--
                      ``(A) subsection (a) shall be applied without 
                  regard to the trade or business requirement contained 
                  therein, and
                      ``(B) any return required under subsection (a) 
                  shall be made by the officer or employee appropriately 
                  designated for the purpose of making such return.
      ``(d) Statements To Be Furnished to Individuals With Respect to 
  Whom Information Is Required.--Every person required to make a return 
  under subsection (a) shall furnish to each individual whose name is 
  required to be set forth in such return a written statement showing--
              ``(1) the name and address of the person required to make 
          such return, and
              ``(2) the aggregate amount of interest described in 
          subsection (a)(2) received by the person required to make such 
          return from the individual to whom the statement is required to 
          be furnished.
  The written statement required under the preceding sentence shall be 
  furnished on or before January 31 of the year following the calendar 
  year for which the return under subsection (a) was required to be made.
      ``(e) Qualified Education Loan Defined.--For purposes of this 
  section, except as provided in regulations prescribed by the Secretary, 
  the term `qualified education loan' has the meaning given such term by 
  section 23(e)(1).
      ``(f) Returns Which Would Be Required To Be Made by 2 or More 
  Persons.--Except to the extent provided in regulations prescribed by 
  the Secretary, in the case of interest received by any person on behalf 
  of another person, only the person first receiving such interest shall 
  be required to make the return under subsection (a).''
      (c) Clerical Amendments.--
              (1) 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 22 
          the following new item:
  
                                ``Sec. 23. Interest on education loans.''
              (2) The table of sections for subpart B of part III of 
          subchapter A of chapter 61 of such Code is amended by inserting 
          after the item relating to section 6050P the following new 
          item:
  
                                ``Sec. 6050Q. Returns relating to 
                                          education loan interest 
                                          received in trade or business 
                                          from individuals.''
      (d) Effective Date.--The amendments made by this section shall 
  apply to any qualified education loan (as defined in section 23(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, 1995, and before the termination of the period described in section 
  23(d)(1) of such Code.
target: Higher Education Investment Act of 1995 - Amends the Internal Revenue Code to allow an individual a credit of 20 percent of the interest paid on any qualified education loan.  Limits the maximum credit allowable to $500 for an individual and $1,000 for two or more individuals.  Imposes a limit on the amount of credit based on modified adjusted gross income of the taxpayer over $40,000 ($60,000 for a joint return).  Limits the period the credit is allowed to a taxpayer or spouse to the first 60 months in which interest payments are required.  Provides that any loan and all refinancings of any loan shall be treated as one loan.  Allows a credit, if the education loan was used to pay the education expenses of an individual other than the taxpayer or the taxpayer's spouse, for certain dependents.  Defines qualified education loan and qualified higher education expenses. Allows a credit to a married couple only if such couple files a joint return.  Requires that an individual engaged in a trade or business who receives from any individual interest aggregating $600 or more on any qualified education loan, make a return with respect to each individual from whom such interest was received.   Directs that in the case of returns which would be required to be made by two or more persons, only the person first receiving such interest shall be required to make the return.
feat_title: Higher Education Investment Act of 1995