A bill to exempt from Federal taxation the obligations of certain nonprofit corporations organized to finance student loans and to provide that incentive payments to lenders of those student loans shall not be regarded as yield from the student loans for the purpose of determining whether bonds issued by such nonprofit organizations are arbitrage bonds.

Excludes from gross income, under the Internal Revenue Code, interest received on qualified scholarship funding bonds.

Defines the term "qualified scholarship funding bonds" as obligations issued by a not for profit corporation established and operated exclusively for the purpose of acquiring student loan notes incurred under the Higher Education Act.

Excludes payments made by the Commissioner of Education from consideration in determining yields on student notes for the purposes of arbitrage bond treatment.