Grassley, Welch Lead Effort to Reduce Financial Barriers for College Students

Grassley, Welch Lead Effort to Reduce Financial Barriers for College Students

WASHINGTON - Sens. Chuck Grassley (R-Iowa) and Peter Welch (D-Vt.) are introducing the Student Loan Bond Expansion Act of 2026 this week to reduce financial barriers for college students looking for lower interest loans. The legislation would exempt Qualified Student Loan Bonds (QSLB) from the private activity bond volume cap and the alternative minimum tax, broadening access to loans with lower interest rates. Rep. Randy Feenstra (R-Iowa) is leading companion legislation in the House of Representatives.

"We shouldn't limit better financial options for students financing their college education. Our bipartisan bill will support state-based nonprofit lenders as they work to empower students with options that better fit their needs. I thank Senator Welch for his support in moving this legislation forward to expand choices for students and reduce overborrowing," Grassley said.

"Far too often, financial barriers can be the deciding factor in whether or not Vermonters can afford higher education," Welch said. "We need to bridge this financial aid gap to make sure students from Vermont to Iowa can get the support they need to achieve their educational goals."

"As a father of four, I know how critical it is to ensure that families have the financial security to have their kids pursue higher education and achieve their future careers. That includes lowering the cost of student loans and reducing financial barriers for Iowans who want to attend college," Feenstra said. "That is why I am pleased that the Senate is introducing this important piece of legislation, which will enable more low-interest-rate student loans to be issued by Qualified Student Loan Bonds - which states like Iowa already utilize to help many students attend college - from the cap for Private Activity Bonds. This investment in the next generation of leaders, innovators, and entrepreneurs will support our economy, lower interest rates on student loans, and give Iowa kids a more viable financial option when considering the full cost of college. I am honored to lead this effort alongside my Iowa colleague, Sen. Grassley."

Find bill text HERE.

Background:

State-based nonprofit lenders like Iowa Student Loan (ISL) Education Lending and Vermont Student Assistance Corp. (VSAC) utilize tax-exempt QSLBs to offer students better interest rates. Unfortunately, these bonds are subject to annual state Private Activity Bond (PAB) volume caps, restricting state-based nonprofit lenders' capacity to do more for students. QSLBs are also subject to the alternative minimum tax, which increases student borrower interest rates and reduces investor interest.

The Student Loan Bond Expansion Act empowers state-based nonprofit lenders to provide more students with favorable financial terms and free counseling. In turn, this helps students make informed choices that meet their individual circumstances and curb overborrowing.

The legislation is supported by the Education Finance Council (EFC).

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