,i  #aac? ,,congress  #b;d ,session  ,h4
 ,r4 #ecii  ,,9 ,,! ,,h\se ,,(          
,,repres5tatives  ,augu/ #a1 #bjad ,mr4 
,pet]s ( ,cali=nia 7= himself & ,mr4    
,v>gas7 introduc$ ! foll[+ bill2 :i* 0  
ref]r$ to ! ,committee on ,ways &       
,means1 & 9 addition to ! ,committee on 
,education & ! ,work=ce1 = a p]iod to be
 subsequ5tly det]m9$ by ! ,speak]1 9 ea*
 case = consid]ation ( su* provisions z 
fall )9 ! jurisdiction ( ! committee    
conc]n$  ,a ,,bill  ,to modify ! grace  
p]iod prior to ! repaym5t p]iod = c]ta9 
,f$]al direct loans & to exclude f      
,f$]al income taxation c]ta9            
employ]-provid$ /ud5t loan assi/ance4   
#a4 ,%ort title ,?is ,act may be cit$ z 
! ,/ud5t ,loan ,repaym5t ,assi/ance ,act
 ( #bjad4  #b4 ,re/oration & an option  
to ext5d ! />t ( ! repaym5t p]iod (     
c]ta9 ,f$]al direct loans  7a7          
,re/oration ( int]e/ subsidy dur+ fir/  
#f-,mon? grace p]iod ,section           
#dbh7;a77#c77;,a77i77,i7 ( ! ,high]     
,education ,act ( #aife 7#bj ,u4,s4,c4  

#ajgh7;a77#c77;,a77i77,i77 is am5d$ by  
ins]t+ or1 = a ,f$]al ,direct ,/af=d    
,loan = :i* ! fir/ disbursem5t is made  
on or aft] ,july #a1 #bjac1 :i* accrues 
prior to ! beg9n+ ( ! repaym5t p]iod ( !
 loan 7except = int]e/ :i* accrues dur+ 
! la/ #f mon?s prior to ! beg9n+ ( su*  
p]iod1 9 ! case ( a /ud5t :o makes an   
election "u section #b7;b77#b7 ( !      
,/ud5t ,loan ,repaym5t ,assi/ance ,act (
 #bjad71 be=e 1 or4  7b7 ,grace-,p]iod  
ext5sion  7#a7 ,am5dm5t ,section        
#dbh7;b77#g7 ( ! ,high] ,education ,act 
( #aife 7#bj ,u4,s4,c4 #ajgh7;b77#g77 is
 am5d$--  7,a7 9 subp>agraph 7,a71 by   
ins]t+ or1 9 ! case ( a /ud5t :o makes  
an election "u section #b7;b77#b7 ( !   
,/ud5t ,loan ,repaym5t ,assi/ance ,act (
 #bjad1 #ab mon?s aft] #f mon?s2 &  7,b7
 9 subp>agraph 7,d71 by ins]t+ or1 9 !  
case ( a /ud5t :o makes an election "u  
section #b7;b77#b7 ( ! ,/ud5t ,loan     
,repaym5t ,assi/ance ,act ( #bjad1 !    
#ab-mon? p]iod aft] #f-mon? p]iod4  7#b7
 ,election ( ext5d$ grace p]iod = c]ta9 

,,fdsl & ,,fdus ,loans ,if ! unemploym5t
 rate calculat$ by ! ,bureau ( ,labor   
,/ati/ics is great] ?an ! natural rate (
 unemploym5t 7z e/abli%$ by ! ,bo>d (   
,gov]nors ( ! ,f$]al ,res]ve ,sy/em71 ! 
,secret>y ( ,education %all provide an  
opportunity = ea* borr[] :o has a ,f$]al
 ,direct ,/af=d ,loan or ,f$]al ,direct 
,unsubsidiz$ ,/af=d ,loan = :i* ! fir/  
disbursem5t is made on or aft] ,july #a1
 #bjac1 to elect a #ab-mon? grace p]iod1
 9 accordance ) section #dbh7;b77#g7 ( !
 ,high] ,education ,act ( #aife1 z am5d$
 by ?is subsection1 be=e beg9n+         
repaym5t4 ,! ,secret>y %all--  7,a7     
notify ea* su* borr[] ( ! opportunity = 
su* an election n lat] ?an #de days be=e
 ! />t ( ! borr[]'s repaym5t p]iod1 z   
det]m9$ "u section #dbh7;b77#g7 ( !     
,high] ,education ,act ( #aife z 9      
effect on ! day be=e ! date ( enactm5t (
 ?is ,act2  7,b7 advise ea* su* borr[] (
 ! f9ancial consequ5ces ( elect+ su*    
#ab-mon? grace p]iod2 &  7,c7 n require 
su* a borr[] to accept a #ab-mon? grace 

p]iod 9 accordance ) section            
#dbh7;b77#g7 ( ! ,high] ,education ,act 
( #aife 7z am5d$ by ?is subsection71    
unless ! borr[] specifically elects su* 
#ab-mon? grace p]iod n lat] ?an #ad days
 be=e ! />t ( ! borr[]'s repaym5t p]iod1
 z det]m9$ "u section #dbh7;b77#g7 ( !  
,high] ,education ,act ( #aife z 9      
effect on ! day be=e ! date ( enactm5t (
 ?is ,act4  #c4 ,exclusion f gross      
income ( b5efits "u c]ta9 /ud5t loan    
paym5t assi/ance programs  7a7 ,9 g5]al 
,"p ,,iii ( sub*apt] ,b ( *apt] #a ( !  
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by ins]t+ aft] section #abg ! foll[+ new
 section3  #abg;,a4 ,/ud5t loan paym5t  
assi/ance programs  7a7 ,9 g5]al ,gross 
income ( a qualifi$ employee does n     
include am\nts paid or incurr$ by !     
employ] = /ud5t loan paym5t assi/ance   
provid$ to su* employee if ! assi/ance  
is furni%$ pursuant to a program :i* is 
describ$ 9 subsection 7c74  7b7         
,qualifi$ employee ,= purposes ( ?is    
subsection1 ! t]m qualifi$ employee     

means any employee :o contributes 79    
addition to any am\nt exclud$ f gross   
income "u ?is section7 n less ?an #ej p]
 mon? = paym5t ( pr9cipal & int]e/ on ! 
loans subject to ! /ud5t loan paym5t    
assi/ance program4  7c7 ,limitations    
7#a7 ,assi/ance limitation ,! am\nt tak5
 into acc\nt "u subsection 7a7 ) respect
 to an individual = /ud5t loan assi/ance
 ) respect to /ud5t loan paym5ts dur+ a 
taxable ye> %all n exce$ #f1jjj4  7#b7  
,e>n$ income limitation ,! am\nt exclud$
 f ! income ( an employee "u subsection 
7a7 = any taxable ye> %all n exce$ !    
e>n$ income ( su* employee = su* taxable
 ye>4  7d7 ,/ud5t loan paym5t assi/ance 
program  7#a7 ,9 g5]al ,= purposes ( ?is
 section a /ud5t loan paym5t assi/ance  
program is a sep>ate writt5 plan ( an   
employ] = ! exclusive b5efit ( 8        
employees to provide su* employees )    
/ud5t loan paym5t assi/ance :i* meets ! 
requirem5ts ( p>agraphs 7#b7 ?r\gh 7#aj7
 ( ?is subsection4 ,if any plan w\ld    
qualify z a /ud5t loan paym5t assi/ance 

program b = a failure to meet !         
requirem5ts ( ?is subsection1 !n1       
not)/&+ su* failure1 su* plan %all be   
treat$ z a /ud5t loan paym5t assi/ance  
program 9 ! case ( employees :o are n   
highly comp5sat$ employees4  7#b7       
,discrim9ation ,! contributions or      
b5efits provid$ "u ! plan %all n        
discrim9ate 9 favor ( employees :o are  
highly comp5sat$ employees 7)9 ! mean+ (
 section #dad7q774  7#c7 ,eligibility ,!
 program %all b5efit employees :o       
qualify "u a classification set up by ! 
employ] & f\nd by ! ,secret>y n to be   
discrim9atory 9 favor ( employees       
describ$ 9 p>agraph 7#b74  7#d7         
,pr9cipal %>ehold]s or own]s ,n m ?an   
#be p]c5t ( ! am\nts paid or incurr$ by 
! employ] = /ud5t loan paym5t assi/ance 
dur+ ! ye> may be provid$ = ! class (   
individuals :o are %>ehold]s or own]s   
7or _! sp\ses or dep5d5ts71 ea* ( :om   
7on any day ( ! ye>7 owns m ?an #e p]c5t
 ( ! /ock or ( ! capital or pr(its      
int]e/ 9 ! employ]4  7#e7 ,no fund+     

requir$ ,a program ref]r$ to 9 p>agraph 
7#a7 is n requir$ to be fund$4  7#f7    
,notification ( eligible employees      
,reasonable notification ( !            
availability & t]ms ( ! program %all be 
provid$ to eligible employees4  7#g7    
,/atem5t ( exp5ses ,! plan %all furni%  
to an employee1 on or be=e ,janu>y #ca1 
a writt5 /atem5t %[+ ! am\nts paid or   
exp5ses incurr$ by ! employ] 9 provid+  
/ud5t loan paym5t assi/ance to su*      
employee dur+ ! previ\s cal5d> ye>4     
7#h7 ,b5efits  7,a7 ,9 g5]al ,a plan    
meets ! requirem5ts ( ?is p>agraph if ! 
av]age b5efits provid$ to employees :o  
are n highly comp5sat$ employees "u all 
plans ( ! employ] is at lea/ #ee p]c5t (
 ! av]age b5efits provid$ to highly     
comp5sat$ employees "u all plans ( !    
employ]4  7,b7 ,sal>y r$uction agreem5ts
 ,= purposes ( subp>agraph 7,a71 9 !    
case ( any b5efits provid$ ?r\gh a sal>y
 r$uction agreem5t1 a plan may disreg>d 
any employees ^: comp5sation is less ?an
 #be1jjj4 ,= purposes ( ?is subp>agraph1

 ! t]m comp5sation has ! mean+ giv5 su* 
t]m by section #dad7q77#d71 except t1 "u
 rules prescrib$ by ! ,secret>y1 an     
employ] may elect to det]m9e comp5sation
 on any o!r basis :i* does n discrim9ate
 9 favor ( highly comp5sat$ employees4  
7#i7 ,contributions made directly to    
l5d] ,a plan meets ! requirem5ts ( ?is  
p>agraph if all b5efits provid$ "u !    
plan are paid directly to ! hold] ( !   
indebt$ness ref]r$ to 9 subsection      
7d77#a77;,a77i74  7#aj7 ,mat*+          
contributions ,a plan :i* meets !       
requirem5ts ( p>agraphs 7#b7 ?r\gh 7#i7 
%all n fail to be treat$ z a program    
describ$ 9 ?is subsection m]ely because 
su* plan provides = ! employ] to make   
mat*+ contributions ) respect to        
employee contributions4  7e7 ,def9itions
 & special rules ,= purposes ( ?is      
section--  7#a7 ,/ud5t loan paym5t      
assi/ance  7,a7 ,9 g5]al ,! t]m /ud5t   
loan paym5t assi/ance means ! paym5t (  
pr9cipal or int]e/ on--  7i7 any        
indebt$ness incurr$ by ! employee solely

 to pay qualifi$ high] education exp5ses
 7z def9$ 9 section #bba7 :i*--  7,i7   
are paid or incurr$ )9 a reasonable     
p]iod ( "t be=e or aft] ! indebt$ness 0 
incurr$1 &  7,,ii7 are attributable to  
education furni%$ dur+ a p]iod dur+ :i* 
! employee 0 an eligible /ud5t1 or  7ii7
 any indebt$ness us$ to ref9ance        
indebt$ness describ$ 9 clause 7i74  ,su*
 t]m %all n include any paym5t (        
pr9cipal or int]e/ on indebt$ness ow$ to
 a p]son :o is relat$ 7)9 ! mean+ (     
section #bfg7;b7 or #gjg7;b77#a77 to !  
taxpay] or to any p]son by reason ( a   
loan "u any qualifi$ employ] plan 7z    
def9$ 9 section #gb7p77#d77 or "u any   
contract ref]r$ to 9 section #gb7p77#e74
  7,b7 ,eligible /ud5t ,! t]m eligible  
/ud5t has ! mean+ giv5 su* t]m by       
section #be;,a7b77#c74  7,c7 ,dep5d5t ,!
 t]m dep5d5t has ! mean+ giv5 su* t]m by
 section #aeb 7det]m9$ )\t reg>d to     
subsections 7b77#a71 7b77#b71 &         
7d77#a77;,b7 !re(74  7#b7 ,e>n$ income  
,! t]m e>n$ income %all h ! mean+ giv5  

su* t]m 9 section #cb7;c77#b71 b su* t]m
 %all n include any am\nts paid or      
incurr$ by an employ] = /ud5t loan      
paym5t assi/ance to an employee4  7#c7  
,employee ,! t]m employee includes1 =   
any ye>1 an individual :o is an employee
 )9 ! mean+ ( section #dja7;c77#a7      
7relat+ to self-employ$ individuals74   
7#d7 ,employ] ,an individual :o owns !  
entire int]e/ 9 an un9corporat$ trade or
 bus9ess %all be treat$ z 8 own employ]4
 ,a p>tn]%ip %all be treat$ z ! employ] 
( ea* p>tn] :o is an employee )9 ! mean+
 ( p>agraph 7#c74  7#e7 ,attribution    
rules  7,a7 ,own]%ip ( /ock ,own]%ip (  
/ock 9 a corporation %all be det]m9$ 9  
accordance ) ! rules provid$ "u         
subsections 7d7 & 7e7 ( section #aefc   
7)\t reg>d to section                   
#aefc7;e77#c77;,c774  7,b7 ,int]e/ 9    
un9corporat$ trade or bus9ess ,! int]e/ 
( an employee 9 a trade or bus9ess :i*  
is n incorporat$ %all be det]m9$ 9      
accordance ) regulations prescrib$ by ! 
,secret>y1 :i* %all be bas$ on pr9ciples

 simil> to ! pr9ciples :i* apply 9 !    
case ( subp>agraph 7,a74  7#f7          
,utilization te/ n applicable ,a /ud5t  
loan paym5t assi/ance program %all n be 
held or consid]$ to fail to meet any    
requirem5ts ( subsection 7c7 7o!r ?an   
p>agraphs 7#d7 & 7#h7 !re(7 m]ely       
because ( utilization rates = ! diff]5t 
types ( assi/ance made available "u !   
program4  7#g7 ,disall[ance ( exclud$   
am\nts z cr$it or d$uction ,no d$uction 
or cr$it %all be all[$ to ! employee "u 
any o!r section ( ?is *apt] = any am\nt 
exclud$ f ! gross income ( ! employee by
 reason ( ?is section4  7#h7 ,treatm5t (
 sal>y r$uction am\nts ,any mat*+       
contribution )held f an employee "u a   
/ud5t loan paym5t assi/ance program     
pursuant to a sal>y r$uction agreem5t   
%all be treat$ = purposes ( ?is title z 
an am\nt paid by ! employee & n z an    
am\nt paid by ! employ]4  4  7b7 ,con=m+
 am5dm5ts ,sections #bba7;d77#b77;,a71  
#dad 7n77#c77;,c7 & 7t77#b71            
#caba7;a77#ah71 #ccjf7;b77#ac71         

#cdja7;a77#ah71 & #fjci;,d7d77#a7 ( su* 
,code are ea* am5d$ by ins]t+ #abg;,a1  
aft] #abg14  7c7 ,cl]ical am5dm5t ,!    
table ( sections = "p ,,iii ( sub*apt]  
,b ( *apt] #a ( su* ,code is am5d$ by   
ins]t+ aft] ! item relat+ to section    
#abg ! foll[+ new item3  ,sec4 #abg;,a4 
,/ud5t loan paym5t assi/ance programs4  
4  7d7 ,effective date ,! am5dm5ts made 
by ?is section %all apply to taxable    
ye>s beg9n+ aft] ! date ( ! enactm5t (  
?is ,act4  #d4 ,d$uction = /ud5t loan   
paym5ts :i* are mat*$ by an employ]  7a7
 ,9 g5]al ,"p ,,vii ( sub*apt] ,b (     
*apt] #a ( ! ,int]nal ,rev5ue ,code (   
#aihf is am5d$ by r$esignat+ section    
#bbd z section #bbe & by ins]t+ aft]    
section #bbc ! foll[+ new section3      
#bbd4 ,d$uction = /ud5t loan paym5ts :i*
 are mat*$ by an employ]  7a7 ,9 g5]al  
,9 ! case ( an individual :o is a       
qualifi$ employee 7z def9$ 9 section    
#abg;,a71 !re %all be all[$ z a d$uction
 an am\nt equal to ! /ud5t loan paym5ts 
made by su* individual ) respect to :i* 

an employ] ( su* individual makes mat*+ 
contributions "u a /ud5t loan paym5t    
assi/ance program :i* are excludible f !
 gross income ( su* employee "u section 
#abg;,a4  7b7 ,annual limitation ,!     
am\nt all[able z a d$uction "u          
subsection 7a7 ) respect to any         
individual = any taxable ye> %all n     
exce$ #f1jjj4  7c7 ,lifetime limitation 
,! am\nt all[able z a d$uction "u       
subsection 7a7 ) respect to any         
individual = any taxable ye> %all n     
exce$ ! excess (--  7#a7 #ej1jjj1 ov]   
7#b7 ! aggregate am\nt all[able z a     
d$uction "u subsection 7a7 ) respect to 
su* individual = all prior taxable ye>s4
  7d7 ,d5ial ( d\ble b5efit ,any am\nt  
exclud$ f ! gross income ( an individual
 "u section #abg;,a %all n be treat$ z  
an am\nt paid by su* individual =       
purposes ( ?is section4 ,! am\nt (      
pr9cipal & int]e/ ) respect to :i* a    
d$uction is all[$ "u ?is section %all n 
be tak5 into acc\nt 9 det]m9+ ! am\nt ( 
any o!r d$uction or cr$it all[$ "u ?is  

*apt]4  4  7b7 ,cl]ical am5dm5t ,! table
 ( sections = "p ,,vii ( sub*apt] ,b (  
*apt] #a ( su* ,code is am5d$ by        
r$esignat+ ! item relat+ to section #bbd
 z an item relat+ to section #bbe & by  
ins]t+ aft] ! item relat+ to section    
#bbc ! foll[+ new item3  ,sec4 #bbd4    
,d$uction = /ud5t loan paym5ts :i* are  
mat*$ by an employ]4  4  7c7 ,effective 
date ,! am5dm5ts made by ?is section    
%all apply to taxable ye>s beg9n+ aft] !
 date ( ! enactm5t ( ?is ,act4