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HR 2660119th CongressIn Committee
To amend the Internal Revenue Code of 1986 to exempt qualified student loan bonds from the volume cap and the alternative minimum tax.
Introduced: Apr 7, 2025
Standard Summary
Comprehensive overview in 1-2 paragraphs
This bill would explicitly treat qualified student loan bonds as exempt from the private-activity bond volume cap and from the alternative minimum tax (AMT) treatment that generally applies to private activity bonds. In practical terms, issuers would be able to issue more tax-exempt bonds to fund student loans without those bonds counting against state private-activity bond caps, and investors would not have to include the interest from these bonds in AMT calculations. The changes reference the existing definitions of “qualified student loan bonds” found in section 144(b) of the Internal Revenue Code. The provisions apply to bonds issued after the date of enactment.
Key Points
- 1Exemption from volume cap: Qualified student loan bonds would be added to the list of bond types that do not count toward the private-activity bond volume cap, expanding the amount of tax-exempt borrowing states and issuers can use to finance student loans.
- 2Pooled financing rules: For purposes of pooled financing bond rules, the “ultimate borrower” for qualified student loan bonds would exclude any student borrower, altering how those bonds are treated in pooled programs.
- 3AMT exemption: Qualified student loan bonds would be excluded from the private activity bond category for purposes of the AMT, meaning interest on these bonds would generally not be subject to AMT considerations (with a note on refunding bonds as specified in the bill).
- 4Conforming numbering: The bill reindexes sections as a result of adding the new paragraph, ensuring the statutory text remains internally consistent.
- 5Effective date: The changes apply to bonds issued after enactment of the bill.
Impact Areas
Primary group/area affected- States, municipalities, and other bond issuers that Finance student-loan projects: They could issue more tax-exempt private activity bonds for student loans without hitting volume caps, potentially improving financing flexibility.- Investors in municipal bonds: They would face less AMT exposure on these bonds, potentially making them more attractive to investors subject to AMT.Secondary group/area affected- Students and families seeking student loan financing: Indirect impact through potentially greater availability or more favorable financing options funded through such bonds, though actual loan terms depend on lenders and market conditions.Additional impacts- Federal tax revenue: Reduced sensitivity to AMT and volume cap limitations for these bonds may reduce potential federal tax revenue from these exemptions.- Market dynamics: Could affect the private-activity bond market by shifting demand and pricing for qualified student loan bonds versus other private activity bonds.- Policy considerations: Signals a targeted federal push to expand tax-exempt financing for student loans, with implications for budget planning and tax expenditure analysis.The bill defines “qualified student loan bonds” as those described in section 144(b) of the Internal Revenue Code; readers may wish to review that section for the precise definition and eligibility criteria.As introduced, the bill has not passed and is referred to the House Ways and Means Committee (status: introduced).
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