A bill to amend section 117 of the Internal Revenue Code of 1954 to provide that Federal grants for tuition and related expenses at institutions of higher education shall not be includible in gross income merely because the recipient is required to render future service as a Federal employee.

Amends the Internal Revenue Code to exclude from gross income Federal grants for tuition and related expenses at institutions of higher education, even though the grant recipient is required to perform future service as a Federal employee. Deems service in a health manpower shortage area as Federal service.