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, and for other purposes.

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.

Amends the Revenue Act of 1978 to extend for one year the exclusion from gross income amounts received as National Research Service Awards.