H.R.2660 - To amend the Internal Revenue Code of 1986 to exempt qualified student loan bonds from the volume cap and the alternative minimum tax. (119th Congress)
Summary
H.R.2660 aims to amend the Internal Revenue Code of 1986 by exempting qualified student loan bonds from both the volume cap and the alternative minimum tax (AMT). This bill was introduced in the House of Representatives on April 7, 2025, by Mr. Feenstra and referred to the Committee on Ways and Means. The proposed changes seek to provide financial relief and incentives related to student loan bonds.
The bill specifically targets Section 146(g) and Section 57(a)(5)(C) of the Internal Revenue Code. It modifies these sections to exclude qualified student loan bonds from certain limitations and tax calculations.
The effective date for these amendments is set for obligations issued after the enactment of the Act.
Expected Effects
If enacted, H.R.2660 would likely increase the issuance of qualified student loan bonds by making them more attractive to investors. This could potentially lower the cost of borrowing for students seeking financial aid. The exemption from the alternative minimum tax could also increase the after-tax return for bondholders, further incentivizing investment.
This could lead to greater availability of student loans. It may also reduce the financial burden on students pursuing higher education.
However, the changes could also reduce federal tax revenue, potentially increasing the national debt if not offset by other measures.
Potential Benefits
- Increased Availability of Student Loans: By exempting qualified student loan bonds from volume caps, more bonds can be issued, potentially increasing the funds available for student loans.
- Reduced Borrowing Costs: Increased bond issuance could lead to lower interest rates for student loans, making education more affordable.
- Attractiveness to Investors: The exemption from the alternative minimum tax makes these bonds more attractive to investors, further incentivizing investment in student loans.
- Simplified Tax Calculations: Removing these bonds from AMT calculations simplifies tax processes for bondholders.
- Potential for Economic Growth: By making education more accessible, the bill could contribute to a more skilled workforce and stimulate economic growth.
Potential Disadvantages
- Reduced Tax Revenue: Exempting these bonds from the volume cap and AMT could reduce federal tax revenue, potentially increasing the national debt.
- Potential for Increased Risk: Increased issuance of student loan bonds could lead to higher overall debt levels and potential risks associated with student loan defaults.
- Complexity in the Tax Code: While simplifying some aspects, the amendments add complexity to the overall tax code by creating specific exemptions.
- Unintended Consequences: The changes could disproportionately benefit certain institutions or investors, leading to unintended market distortions.
- Potential for Abuse: The exemption could be exploited if the definition of "qualified student loan bond" is not sufficiently stringent.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the Constitution's general welfare clause (Preamble). This clause allows Congress to enact laws that promote the overall well-being of the nation. By aiming to make education more accessible through student loan bonds, the bill could be argued to fall under this clause.
Article I, Section 8 grants Congress the power to borrow money on the credit of the United States. This bill relates to the issuance of bonds, which is a form of borrowing, and therefore falls under Congress's enumerated powers.
However, the Constitution does not explicitly address student loans or tax exemptions for specific types of bonds. Therefore, the alignment is based on interpretation of the general welfare clause and the power to borrow money.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).