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Qualified Scholarship Funding Corporation Rules
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Update "Qualified Scholarship Funding Corporation" Rules

In recent decades, tuition costs have outpaced increases in federal statutory loan limits and the need for nonprofit and state-based education loan borrowing has grown. Nonprofit and state-based education loan funding providers, with their access to tax-exempt financing, are uniquely qualified to make education loans with the best possible terms and to make refinancing loans at low interest rates. However, certain non-profit and state student loan funding providers — “qualified scholarship funding corporations” under Section 150(d) of the Internal Revenue Code — are currently ineligible to issue tax-exempt bonds to finance nonprofit and state-based education student loans and refinance education loans. 

Section 150(d) allows only qualified scholarship funding corporations to use tax-exempt financing to acquire education loans incurred under the HEA, which was the Federal Family Education Loan Program (FFELP). An update is needed to  the Internal Revenue Code to allow qualified scholarship funding corporations to access tax-exempt financing for nonprofit and state-based education loans and refinancing loans. 

EFC endorses H.R.480, the Student Loan Opportunity Act, introduced in January 2017 by Rep. Bill Flores (R-TX), which would allow qualified scholarship funding corporations to access tax-exempt financing to fund nonprofit and state-based education loans for students attending school and provide low-cost refinancing loans to borrowers once they leave school.