H.R. 2660 modifies tax law to make it easier for states and organizations to issue bonds that finance student loans by removing two financial restrictions on these bonds. Currently, student loan bonds count against a state's annual "volume cap"—a limit on how much tax-exempt debt states can issue—and are subject to the alternative minimum tax, both of which increase their cost. This bill exempts qualified student loan bonds from these restrictions, potentially lowering borrowing costs and making it more affordable for lenders to fund student loans. The changes apply to any bonds issued after the bill becomes law and include special rules to prevent lenders from exploiting the exemption by shifting costs to individual student borrowers. While the bill does not include explicit new funding, reducing tax burdens on student loan bonds could indirectly increase lending activity in this market.
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