The Affordable Education Act of 2001 would ease taxes on student loans, employer-provided education, state college savings plans and federal education savings accounts.
The bill, which must be approved by Congress, likely will be included as part of President Bush's tax cut plan.
Robert Samors, federal relations official for the UNC system, said the bill could make college more affordable for students.
"It's a given fact that students come out of college with considerable loans to pay back," Samors said.
Under the proposed bill, the current 60-month deadline for paying back student loans would be eliminated.
"This is a positive development," Samors said. "It reduces the burden that's placed on students and their families."
Shirley Ort, UNC director of scholarships and student aid, said the bill would raise the cutoff income level for loan-interest deductions.
Under the proposal, the adjusted gross income ceiling would increase from $55,000 to $65,000 for single taxpayers and from $75,000 to $130,000 for taxpayers filing jointly.
"Students who have more loans would benefit, such as the out-of-state, graduate and professional students."