Sponsors (3)
The bill encourages private loan-repayment grants to retain workers in underserved communities by excluding those payments from recipients' taxable income and increasing transparency, while creating some federal revenue loss, limiting a separate student tax deduction, and adding compliance costs for nonprofits.
Students and young adults who live and work in lower-degree-attainment communities can receive portions of qualifying student loan repayments from eligible private foundations/community trusts tax-free, reducing their after-tax debt burden.
Private foundations and community trusts are more likely to provide loan-repayment grants to retain workforce in underserved areas because those payments will not count as taxable expenditures for the foundations, strengthening philanthropic support for local workforce development.
Taxpayers and oversight bodies will get more information because the Treasury must report usage and the GAO will study the program, increasing transparency about who receives grants and how funds are used.
Taxpayers could face reduced federal revenue from excluding these foundation-paid loan repayments from recipients' taxable income, creating potential budgetary pressure or trade-offs for other spending.
Students who receive loan-repayment grants will lose the ability to claim the student loan interest deduction for interest amounts paid by the grant, reducing a separate tax benefit and complicating tax filings for recipients.
Foundations and community trusts face new Treasury reporting and compliance requirements, increasing administrative burden and costs for nonprofit grant programs.
Based on analysis of 2 sections of legislative text.
Excludes certain private-foundation or community-trust loan-repayment grants from recipients' taxable income, adds foundation excise-rule relief, requires Treasury regs and reporting, and orders a GAO study.
Introduced February 17, 2026 by Darin Lahood · Last progress February 17, 2026
Creates a new tax-free category for private-foundation or community-trust grants that repay recent graduates' qualified student loans if the recipient lives and works in a targeted community with below-average bachelor’s degree attainment. It also treats those grants as non-taxable expenditures for foundations, prevents a double tax benefit with the student loan interest deduction, directs Treasury to issue rules and reports, and requires a GAO study on program implementation.