Treatment as interest on education loan

(a) In general Section 221 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (g) Outcomes-Based payment agreements For purposes of this section— (1) In general In the case of an individual who enters into an outcomes-based payment agreement for purposes of financing the qualified higher education expenses of the individual, the amount described in paragraph (2) shall be treated in the same manner as interest paid on a qualified education loan. (2) Amount described The amount described in this paragraph is an amount equal to the excess of— (A) amounts paid by the taxpayer during the taxable year under the terms of an outcomes-based payment agreement described in paragraph (1), over (B) the excess of— (i) the amount of the financing provided to the taxpayer under the terms of such agreement, over (ii) the aggregate amounts paid by the taxpayer under the terms of such agreement in all preceding taxable years. (3) Rules to apply Rules similar to the rules of subparagraphs (A), (B), and (C) of subsection (c)(1) shall apply for purposes of determining whether an agreement was entered into for purposes of financing the qualified higher education expenses of an individual. (4) Outcomes-based payment agreement The term outcomes-based payment agreement has the meaning given such term by section 140(h) of the Truth in Lending Act.. (b) Effective date The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.