Workforce Development Through Post-Graduation Scholarships Act of 2023

II 118TH CONGRESS 1ST SESSION S. 1757 To amend the Internal Revenue Code of 1986 to exclude certain post-gradua- tion scholarship grants from gross income in the same manner as quali- fied scholarships to promote economic growth. IN THE SENATE OF THE UNITED STATES MAY 30, 2023 Mr. PETERS (for himself and Mrs. CAPITO) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to exclude certain post-graduation scholarship grants from gross in- come in the same manner as qualified scholarships to promote economic growth. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Workforce Develop- 4 ment Through Post-Graduation Scholarships Act of 5 2023’’. 6 VerDate Sep 11 2014 05:29 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1757.IS S1757 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 1757 IS SEC. 2. POST-GRADUATION SCHOLARSHIP GRANTS EX- 1 CLUDED FROM GROSS INCOME IN SAME MAN- 2 NER AS QUALIFIED SCHOLARSHIPS. 3 (a) IN GENERAL.—Section 117(a) of the Internal 4 Revenue Code of 1986 is amended— 5 (1) by striking the period at the end and insert- 6 ing ‘‘, or’’, 7 (2) by striking ‘‘any amount received’’ and in- 8 serting the following: ‘‘any amount which— 9 ‘‘(1) is received’’, and 10 (3) by adding at the end the following new 11 paragraph: 12 ‘‘(2) is received as a post-graduation scholar- 13 ship grant paid on behalf of an individual.’’. 14 (b) POST-GRADUATION SCHOLARSHIP GRANT.—Sec- 15 tion 117(b) of the Internal Revenue Code of 1986 is 16 amended by redesignating paragraph (2) as paragraph (3) 17 and by inserting after paragraph (1) the following new 18 paragraph: 19 ‘‘(2) POST-GRADUATION SCHOLARSHIP 20 GRANT.— 21 ‘‘(A) IN GENERAL.—The term ‘post-grad- 22 uation scholarship grant’ means any grant pro- 23 gram— 24 ‘‘(i) which is established by an organi- 25 zation which— 26 VerDate Sep 11 2014 05:29 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1757.IS S1757 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 1757 IS ‘‘(I) is described in section 1 501(c)(3) and exempt from tax under 2 section 501(a), and 3 ‘‘(II) is either a private founda- 4 tion or community trust described in 5 section 170(b)(1)(A)(vi) (other than 6 an organization established by an or- 7 ganization described in section 8 170(b)(1)(A)(ii) or an organization 9 described in section 170(b)(1)(A)(iii) 10 the principal purpose or function of 11 which is the provision of medical edu- 12 cation), 13 ‘‘(ii) under which, in accordance with 14 the conditions of a grant, such organiza- 15 tion repays any portion of an applicable 16 education loan incurred by an individual, 17 ‘‘(iii) which requires a grantee to live 18 and work in an applicable community, 19 ‘‘(iv) under which payments are made 20 directly to the holder of the loan, and 21 ‘‘(v) which is not provided to an em- 22 ployee of the granting organization or a re- 23 lated entity of the granting organization. 24 VerDate Sep 11 2014 05:29 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1757.IS S1757 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 1757 IS ‘‘(B) APPLICABLE EDUCATION LOAN.—For 1 purposes of subparagraph (A), the term ‘appli- 2 cable education loan’ means, with respect to 3 any individual, a qualified education loan (as 4 defined in section 221(d)(1)) incurred to pay 5 qualified higher education expenses (as defined 6 in section 221(d)(2)) of such individual. 7 ‘‘(C) APPLICABLE COMMUNITY.—For pur- 8 poses of subparagraph (A), the term ‘applicable 9 community’ means any area that has a bach- 10 elor’s degree attainment rate for the population 11 that is below the state or national average for 12 such population (as determined based on data 13 collected by the Census Bureau).’’. 14 (c) AMOUNT NOT TREATED AS TAXABLE EXPENDI- 15 TURE BY PRIVATE FOUNDATION.—Section 4945(g) of the 16 Internal Revenue Code of 1986 is amended by striking 17 ‘‘or’’ at the end of paragraph (2), by striking the period 18 at the end of paragraph (3) and inserting ‘‘, or’’, and by 19 adding at the end the following new paragraph: 20 ‘‘(4) the grant is a post-graduation scholarship 21 grant (as defined in section 117(b)(2)).’’. 22 (d) DENIAL OF DOUBLE BENEFIT.—Section 221(e) 23 of the Internal Revenue Code of 1986 is amended by re- 24 designating paragraphs (2) and (3) as paragraphs (3) and 25 VerDate Sep 11 2014 05:29 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1757.IS S1757 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 1757 IS (4), respectively, and by inserting after paragraph (1) the 1 following new paragraph: 2 ‘‘(2) DENIAL OF DOUBLE BENEFIT IN CASE OF 3 POST-GRADUATION SCHOLARSHIP GRANTS.—Any in- 4 terest which is paid as part of a post-graduation 5 scholarship grant and excluded from gross income 6 under section 117 shall not be taken into account 7 under this section.’’. 8 (e) REGULATORY AUTHORITY.—Section 117 of the 9 Internal Revenue Code of 1986 is amended by adding at 10 the end the following new subsection: 11 ‘‘(e) REGULATIONS.—The Secretary shall prescribe 12 such reporting requirements and regulations as may be 13 necessary or appropriate to carry out subsection (a)(2).’’. 14 (f) REPORTS.— 15 (1) SECRETARY OF TREASURY.—Not later than 16 3 years after the date of the enactment of this Act, 17 and periodically thereafter, the Secretary of the 18 Treasury, or the Secretary’s delegate, shall submit 19 to Congress a report on the implementation and ef- 20 fectiveness of the amendments made by this section. 21 (2) COMPTROLLER GENERAL.— 22 (A) IN GENERAL.—Not later than 5 years 23 after the date of enactment of this Act, the 24 Comptroller General of the United States shall 25 VerDate Sep 11 2014 05:29 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1757.IS S1757 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 1757 IS publish the result of a study on post-graduation 1 scholarship grants to which section 117 of the 2 Internal Revenue Code of 1986 (as amended by 3 this section) applies. 4 (B) CONTENTS OF REPORT.—The informa- 5 tion published under subparagraph (A) shall in- 6 clude the following: 7 (i) The length of time involved in such 8 grants. 9 (ii) The amount paid out under such 10 grants. 11 (iii) The disposition of any funds paid 12 under such grants, including the identity 13 of any loan holders who benefit from such 14 funds. 15 (g) EFFECTIVE DATE.—The amendments made by 16 this section shall apply to taxable years beginning after 17 the date of the enactment of this Act. 18 Æ VerDate Sep 11 2014 05:29 Jun 13, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S1757.IS S1757 pbinns on DSKJLVW7X2PROD with $$_JOB