Summary of Senate Bill S 3761

Overview

This bill proposes to amend the Internal Revenue Code of 1986 to exempt qualified student loan bonds from the volume cap and the alternative minimum tax. The intent is to make it easier for state and local governments to issue tax-exempt bonds to fund student loan programs.

Key Provisions

The main provisions of this bill are:

1. Exemption from Volume Cap: The bill would exempt qualified student loan bonds from the state volume cap, which limits the total amount of tax-exempt private activity bonds that states can issue each year. This would allow states to issue more tax-exempt bonds to support student loan programs without hitting the volume cap.

2. Exemption from Alternative Minimum Tax: The bill would also exempt qualified student loan bonds from the alternative minimum tax (AMT). The AMT is a parallel tax system that can make some tax-exempt bonds subject to taxation. Exempting student loan bonds from the AMT would preserve their full tax-exempt status.

Potential Impact

If enacted, this bill could have the following impacts:

• Increased Student Loan Funding: By making it easier for state and local governments to issue tax-exempt bonds for student loans, the bill could increase the availability and affordability of student loan capital.

• Lower Borrowing Costs: The tax exemptions in the bill would likely translate to lower interest rates for student loan borrowers, making loans more affordable.

• Expanded Access to Higher Education: Greater access to affordable student loans could help more students attend and complete college, especially those from lower-income backgrounds.

Procedural Timeline

The bill was introduced in the Senate on February 3, 2026 and has been referred to the Committee on Finance for consideration. No further legislative action has been taken on the bill at this time.