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."
She added that about 5,000 UNC students have loans, totaling nearly $66.8 million.
Steve Brooks, executive director at the N.C. State Education Assistance Authority, said one of the best features of the bill is that deposits into the state-managed college-savings funds will not be taxed anymore. "It's a great plan for future students," he said.
He also said the proposed educational tax cut is a positive development for college students. "If there's going to be a tax cut, there are several ways to do it," Brooks said. "Educational issues are on the agenda, and that's encouraging."
But Brooks cautioned that reforms will not happen immediately. "There's a long way to go," he said.
Both Samors and Ort echoed Brooks' sentiments.
"We need to pay close attention to see if the educational legislation will not get dropped off the table," Samors said.
And Ort added, "I hope it doesn't come to the point where Congress takes an either-or approach."
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