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Tax-Exempt Bond Financing
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Preserve Tax-Exempt Bond Financing (Private Activity Bonds) for Education Loans

+ Nonprofit and state-based education loan funding providers have the unique ability to utilize tax-exempt bond financing to offer lower borrowing costs to students and families. Tax-exempt bond financing typically results in reduced loan costs to the borrower because interest on the bonds is not subject to federal income taxes.

EFC strongly supports maintaining the ability of nonprofit and state-based student loan providers to utilize tax-exempt bond financing to offer student loans, which often carry lower interest rates than federal loans.

EFC additionally supports the proposed elimination of the Alternative Minimum Tax (AMT), which would minimize costs to education loan borrowers. Congress’ previous temporary elimination of the AMT on income earned from Private Activity Bonds resulted in lower borrowing rates for student loan issuers, with those savings passed directly to student loan borrowers. For example, a student borrowing $20,000 could save $500 or more in lower interest payments on a ten-year loan with the elimination of the AMT.