The Senate last week voted to simplify interest reporting rules on credit cards and other revolving lines of credit issued to students.

Lenders have complained of the current requirement that they break out and report the tax-deductible interest incurred for educational expenses such as tuition, room, and board.

"The current reporting obligation creates costly and unnecessary administrative difficulty for lenders," said J. Leon Peace Jr., senior tax legislative counsel for the American Bankers Association.

Under the Senate measure, the borrower would be asked whether a credit line would be used only for educational purposes. All interest incurred on such lines would be reported as tax exempt.

The measure was included in legislation to restructure the Internal Revenue Service. An identical bill was approved by the House on June 25.

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