article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Teachers For Tomorrow Act of 2001''. SEC. 2. REVISION OF TEACHER LOAN FORGIVENESS PROGRAMS. (a) Guaranteed Student Loans.--Part B of title IV of the Higher Education Act of 1965 is amended by-- (1) redesignating section 428K (20 U.S.C. 1078-11) as section 428L; and (2) by inserting after section 428J the following new section: ``SEC. 428K. EXPANDED LOAN FORGIVENESS FOR TEACHERS. ``(a) Purpose.--It is the purpose of this section to expand, subject to the availability of appropriations therefor, the eligibility of individuals to qualify for loan forgiveness for teachers beyond that available under section 428J, in order to provide additional incentives for such individuals to enter and continue in the teaching profession. ``(b) Program Authorized.-- ``(1) In general.--From the sums appropriated pursuant to subsection (i), the Secretary shall carry out a program, through the holder of the loan, of assuming the obligation to repay a qualified loan amount for a loan made under section 428 or 428H, in accordance with subsection (c), for any new borrower on or after October 1, 1998, who is not eligible for loan forgiveness under section 428J, but who-- ``(A) is employed as a full-time teacher-- ``(i) in a public elementary or secondary school; ``(ii) if employed as a secondary school teacher, is teaching a subject area that is relevant to the borrower's academic major as certified by the chief administrative officer of the public secondary school in which the borrower is employed; and ``(iii) if employed as an elementary school teacher, has demonstrated, as certified by the chief administrative officer of the public elementary school in which the borrower is employed, knowledge and teaching skills in reading, writing, mathematics, or other areas of the elementary school curriculum; ``(B) has a State certification (which may include certification obtained through alternative means) or a State license to teach, and has not failed to comply with State or local accountability standards; and ``(C) is not in default on a loan for which the borrower seeks forgiveness. ``(2) Selection of recipients.--The Secretary shall by regulations, establish a formula that ensures fairness and equality for applicants in the selection of borrowers for loan repayment under this section, based on the amount available pursuant to subsection (i). ``(c) Qualified Loans Amount.-- ``(1) In general.--The Secretary shall repay not more than the percentage specified in paragraph (2) of the loan obligation on a loan made under section 428 or 428H that is outstanding after the completion of each complete school year of teaching described in subsection (b)(1). No borrower may receive a reduction of loan obligations under both this section and section 460. ``(2) Percentage eligible.--The percent of the loan obligation which the Secretary shall repay under paragraph (1) of this subsection is-- ``(A) in the case of teaching in a school that qualifies under section 465(a)(2)(A) for loan cancellation for Perkins loan recipients who teach in such schools, 25 percent for the first or second year of such service, and 50 percent for the third year of such service; or ``(B) in the case of any other public elementary or secondary school, 15 percent for the first or second year of such service, 20 percent for the third or fourth year of such service, and 30 percent for the fifth year of such service. ``(3) Treatment of consolidation loans.--A loan amount for a loan made under section 428C may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan made under section 428 or 428H for a borrower who meets the requirements of subsection (b), as determined in accordance with regulations prescribed by the Secretary. ``(4) Treatment of years of service for continuing education loans.--For purposes of paragraph (2), the year of service is determined on the basis of the academic year that the borrower began the service as a full-time teacher, except that in the case of a borrower who incurs a loan obligation for continuing education expenses while teaching, the year of service is determined on the basis of the academic year following the academic year for which the loan obligation was incurred. ``(d) Regulations.--The Secretary is authorized to issue such regulations as may be necessary to carry out the provisions of this section. ``(e) Construction.--Nothing in this section shall be construed to authorize any refunding of any repayment of a loan. ``(f) List.--If the list of schools in which a teacher may perform service pursuant to subsection (c)(2)(A) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination. ``(g) Additional Eligibility Provisions.-- ``(1) Continued eligibility.--Any teacher who performs service in a school that-- ``(A) meets the requirements of subsection (b)(1)(A) in any year during such service; and ``(B) in a subsequent year fails to meet the requirements of such subsection, may continue to teach in such school and shall be eligible for loan forgiveness pursuant to subsection (b). ``(2) Prevention of double benefits.--No borrower may, for the same service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.). ``(h) Definition.--For purposes of this section, the term `year', where applied to service as a teacher, means an academic year as defined by the Secretary. ``(i) Authorization of Appropriations.--There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2002 and each of the 5 succeeding fiscal years.''. (b) Direct Student Loans.--Part D of title IV of the Higher Education Act of 1965 is amended by inserting after section 460 the following new section: ``SEC. 460A. EXPANDED LOAN FORGIVENESS FOR TEACHERS. ``(a) Purpose.--It is the purpose of this section to expand, subject to the availability of appropriations therefor, the eligibility of individuals to qualify for loan forgiveness for teachers beyond that available under section 460, in order to provide additional incentives for such individuals to enter and continue in the teaching profession. ``(b) Program Authorized.-- ``(1) In general.--From the sums appropriated pursuant to subsection (i), the Secretary shall carry out canceling the obligation to repay a qualified loan amount in accordance with subsection (c) for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made under this part for any new borrower on or after October 1, 1998, who is not eligible for loan forgiveness under section 460, but who-- ``(A) is employed as a full-time teacher-- ``(i) in a public elementary or secondary school; ``(ii) if employed as a secondary school teacher, is teaching a subject area that is relevant to the borrower's academic major as certified by the chief administrative officer of the public secondary school in which the borrower is employed; and ``(iii) if employed as an elementary school teacher, has demonstrated, as certified by the chief administrative officer of the public elementary school in which the borrower is employed, knowledge and teaching skills in reading, writing, mathematics, or other areas of the elementary school curriculum; ``(B) has a State certification (which may include certification obtained through alternative means) or a State license to teach, and has not failed to comply with State or local accountability standards; and ``(C) is not in default on a loan for which the borrower seeks forgiveness. ``(2) Selection of recipients.--The Secretary shall by regulations, establish a formula that ensures fairness and equality for applicants in the selection of borrowers for loan repayment under this section, based on the amount available pursuant to subsection (i). ``(c) Qualified Loans Amount.-- ``(1) In general.--The Secretary shall cancel not more than the percentage specified in paragraph (2) of the loan obligation on a loan made under this part that is outstanding after the completion of each complete school year of teaching described in subsection (b)(1). No borrower may receive a reduction of loan obligations under both this section and section 428J. ``(2) Percentage eligible.--The percent of the loan obligation which the Secretary shall cancel under paragraph (1) of this subsection is-- ``(A) in the case of teaching in a school that qualifies under section 465(a)(2)(A) for loan cancellation for Perkins loan recipients who teach in such schools, 25 percent for the first or second year of such service, and 50 percent for the third year of such service; or ``(B) in the case of any other public elementary or secondary school, 15 percent for the first or second year of such service, 20 percent for the third or fourth year of such service, and 30 percent for the fifth year of such service. ``(3) Treatment of consolidation loans.--A loan amount for a Federal Direct Consolidation Loan may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan made under section 428 or 428H for a borrower who meets the requirements of subsection (b), as determined in accordance with regulations prescribed by the Secretary. ``(4) Treatment of years of service for continuing education loans.--For purposes of paragraph (2), the year of service is determined on the basis of the academic year that the borrower began the service as a full-time teacher, except that in the case of a borrower who incurs a loan obligation for continuing education expenses while teaching, the year of service is determined on the basis of the academic year following the academic year for which the loan obligation was incurred. ``(d) Regulations.--The Secretary is authorized to issue such regulations as may be necessary to carry out the provisions of this section. ``(e) Construction.--Nothing in this section shall be construed to authorize any refunding of any repayment of a loan. ``(f) List.--If the list of schools in which a teacher may perform service pursuant to subsection (c)(2)(A) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination. ``(g) Additional Eligibility Provisions.-- ``(1) Continued eligibility.--Any teacher who performs service in a school that-- ``(A) meets the requirements of subsection (b)(1)(A) in any year during such service; and ``(B) in a subsequent year fails to meet the requirements of such subsection, may continue to teach in such school and shall be eligible for loan forgiveness pursuant to subsection (b). ``(2) Prevention of double benefits.--No borrower may, for the same service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.). ``(h) Definition.--For purposes of this section, the term `year', where applied to service as a teacher, means an academic year as defined by the Secretary. ``(i) Authorization of Appropriations.--There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2002 and each of the 5 succeeding fiscal years.''. SEC. 3. NO INCOME TAX BY REASON OF LOAN FORGIVENESS. Subsection (f) of section 108 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: ``(4) Loan forgiveness for teachers.--In the case of an individual, gross income does not include any amount which (but for this paragraph) would be includible in gross income by reason of the discharge (in whole or in part) of any loan if such discharge was pursuant to section 428J, 428K, 460, or 460A of the Higher Education Act of 1965 (20 U.S.C. 1078-10), as in effect on the date of the enactment of this paragraph.''
summary: Teachers for Tomorrow Act of 2001 - Amends the Higher Education Act of 1965 (HEA) to establish new programs for teacher student loan forgiveness, under the guaranteed loan program and the direct loan program. Requires three consecutive complete school years of full-time teaching in a public elementary or secondary school as: (1) a secondary school teacher of a subject area relevant to the borrower's academic major; or (2) an elementary school teacher who has demonstrated knowledge and teaching skills in reading, writing, mathematics, and other curriculum areas.Amends the Internal Revenue Code to exclude from a teacher's gross income any student loan amounts discharged under both the current HEA programs and those added by this Act.