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H.R. 6767House115th Congress (2017-2019)In Committee

To amend the Internal Revenue Code of 1986 to allow qualified education loan repayments from section 529 plans.

Sponsored by Erik PaulsenRep. Erik Paulsen (R-MN)
Introduced September 10, 2018

AI-Generated Summary

Updated April 15, 2026 at 11:31 PM UTC

The bill changes the tax code so that money taken out of a 529 college‑savings plan can be used to pay back qualified student loans. It lets a beneficiary—or a sibling of the beneficiary—use up to $10,000 of 529 withdrawals for loan principal or interest, and it adjusts the student‑loan‑interest deduction so the same payment isn’t counted twice. This affects families that have 529 plans and education loans.

Key Provisions

  • Adds a new provision to Section 529(c) allowing 529 withdrawals to be treated as qualified higher‑education expenses when used to pay principal or interest on a qualified education loan for the designated beneficiary or a sibling.
  • Sets a $10,000 limit per individual on such loan‑repayment withdrawals, reduced by any amount used in prior years.
  • Provides separate accounting for sibling loans and defines “sibling” consistent with existing tax rules.
  • Amends Section 221(e)(1) so the student‑loan‑interest deduction is reduced by the amount of 529 distributions used for loan repayments, preventing a double tax benefit.
  • Applies the changes to any 529 distributions made after the bill’s enactment date.

Legislative Activity

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HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

September 10, 2018

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HouseIntro Referral

Introduced in House

September 10, 2018

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

September 10, 2018

Bill Text

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Introduced in HouseIssued September 10, 2018

I

115th CONGRESS

2d Session

H. R. 6767

IN THE HOUSE OF REPRESENTATIVES

September 10, 2018

Mr. Paulsen introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to allow qualified education loan repayments from section 529 plans.

1.

Qualified education loan repayments allowed from section 529 plans

(a)

In general

Section 529(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(8)

Treatment of qualified education loan repayments

(A)

In general

Any reference in this subsection to the term qualified higher education expense shall include a reference to amounts paid as principal or interest on any qualified education loan (as defined in section 221(d)) of the designated beneficiary or a sibling of the designated beneficiary.

(B)

Limitation

The amount of distributions treated as a qualified higher education expense under this paragraph with respect to the loans of any individual shall not exceed $10,000 (reduced by the amount of distributions so treated for all prior taxable years).

(C)

Special rules for siblings of the designated beneficiary

(i)

Separate accounting

For purposes of subparagraph (B) and subsection (d), amounts treated as a qualified higher education expense with respect to the loans of a sibling of the designated beneficiary shall be taken into account with respect to such sibling and not with respect to such designated beneficiary.

(ii)

Sibling defined

For purposes of this paragraph, the term sibling means an individual who bears a relationship to the designated beneficiary which is described in section 152(d)(2)(B).

.

(b)

Coordination with deduction for student loan interest

Section 221(e)(1) of such Code is amended by adding at the end the following: The deduction otherwise allowable under subsection (a) (prior to the application of subsection (b)) to the taxpayer for any taxable year shall be reduced (but not below zero) by so much of the distributions treated as a qualified higher education expense under section 529(c)(8) with respect to loans of the taxpayer as would be includible in gross income under section 529(c)(3)(A) for such taxable year but for such treatment..

(c)

Effective date

The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.