A major battle is being waged in Congress between supporters of proposals to legislate a tax credit for tuition payments to educational institutions and supporters of the administration's alternative proposal, which would build on existing grant and loan programs. Opponents of tuition tax credits are divided between those who feel that no tax relief is necessary and those who instead support the administration's proposal to expand existing grant and loan programs. Supporters of tax credits believe that as the cost of education coninues to rise, middle-income families will be deprived of any realistic choice about the education of their children, and that eventually nonpublic and parochial schools will virtually disappear. Explored here are the background of the issue (including campaign commitments and existing federal programs), action on tuition tax credits in prior Congresses, action in the 95th Congress, and the arguments about need, cost implications, burden and complexity, effect on social goals, effect on public schools, effect on nonpublic schools, and constitutional concerns. (Author/MSE)