TAX-EXEMPT BONDS FOR STUDENT LOANS.

SEC. 2105. TAX-EXEMPT BONDS FOR STUDENT LOANS. (a) In General.— Section 103(a) (relating to interest on certain governmental obligations) is amended by striking out “or” at the end of paragraph (2), striking out the period at the end of paragraph (3) and inserting in lieu thereof “; or , and by adding at the end thereof the following: “(4) qualified scholarship funding bonds.” (b) Definition of Qualified Scholarship Funding Bonds.— Section 103 is amended by redesignating subsection (f) as (g), and by inserting after subsection (e) the following new subsection: “(f) Qualified Scholarship Funding Bonds.— For purposes of subsection (a), the term ‘qualified scholarship funding bonds’ means obligations issued by a corporation which— “(1) is a corporation not for profit established and operated exclusively for the purpose of acquiring student loan notes incurred under the Higher Education Act of 1965, and “(2) is organized at the request of a State or one or more political subdivisions thereof or is requested to exercise such power by one or more political subdivisions and required by its corporate charter and bylaw’s, or required by State law, to devote any income (after payment of expenses, debt service, and the creation of reserves for the same) to the purchase of additional student loan notes or to pay over any income to the State or a political subdivision thereof.” (c) Conforming Amendments.— (1) Section 103(d) (relating to arbitrage bonds) is amended by redesignating paragraph (5) as paragraph (6) and inserting after paragraph (4) the following new paragraph: “(5) Student loan incentive payments.— Payments made by the Commissioner of Education pursuant to section 2 of the Emergency Insured Student Loan Act of 1969 are not to be taken into account, for purposes of subsection (d)(2)(A), in determining yields on student loan notes.” (2) Section 103(d) (relating to arbitrage bonds) is amended by striking out “(a)(1)” each place it appears in paragraph (1)(including the heading) and paragraph (2) and inserting in lieu thereof “(a)(1) or (4)”. (d) Effective Date.— The amendments made by this section apply to obligations issued on or after the date of the enactment of this Act.