HR2660-119

What This Bill Does

This bill changes tax rules for qualified student loan bonds. It adds those bonds to the Internal Revenue Code section 146 volume-cap exceptions, clarifies that student borrowers are not treated as ultimate borrowers for the relevant bond rule, and excludes qualified student loan bonds from the private activity bond preference that can trigger alternative minimum tax treatment. The AMT exception applies to bonds issued after enactment and does not extend to a refunding bond unless the original or refunded bond also qualified.

Who Benefits and How

Student loan bond issuers benefit because qualified student loan bonds would not consume State private activity bond volume cap. Student borrowers benefit indirectly if issuers can finance or refinance education loans with lower tax-exempt borrowing costs. State education finance authorities benefit from more flexible use of tax-exempt bond authority for student loan programs. Municipal bond investors benefit because qualified student loan bonds become less exposed to alternative minimum tax treatment.

Who Bears the Burden and How

The Internal Revenue Service must administer new volume-cap and alternative-minimum-tax exceptions for qualified student loan bonds. Treasury tax administrators must update guidance for student loan bond issuers and refunding bonds. Federal taxpayers bear revenue costs if more bond interest receives tax-favored treatment. Other private activity bond applicants may face less competition for volume cap but still operate within remaining allocation rules.

Key Provisions

• Exempts qualified student loan bonds from the private activity bond volume cap.
• Provides that student borrowers are not ultimate borrowers for qualified student loan bond purposes.
• Excludes qualified student loan bonds from private activity bond treatment under the alternative minimum tax preference.
• Limits the refunding-bond exception to cases where the original bond also qualified.