Workforce Development Through Post-Graduation Scholarships Act of 2026
- Bill Number
- H.R. 7594
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-02-17: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-05-15T08:08:03Z
AI-Generated Summary
Purpose This legislation amends the Internal Revenue Code to exclude certain post-graduation scholarship grants from gross income, treating them similarly to qualified scholarships. The goal is to encourage organizations to repay education loans for individuals who live and work in communities with below-average college degree attainment rates, thereby supporting workforce development and economic growth.
Key Provisions
- Income Exclusion: Adds a new category under Section 117(a) to exclude amounts received as post-graduation scholarship grants from an individual's gross income.
- Definition of Post-Graduation Scholarship Grant: Limits eligibility to grants from 501(c)(3) tax-exempt organizations (private foundations or community trusts, with exceptions for certain educational or medical entities). Grants must:
- Repay qualified education loans directly to the loan holder.
- Require the recipient to live and work in an "applicable community" (areas where bachelor's degree attainment is below state or national averages, per Census data).
- Not be provided to employees of the granting organization or related entities.
- Private Foundation Rules: Amends Section 4945(g) so these grants are not treated as taxable expenditures for private foundations.
- Interest Deduction Limitation: Prevents double tax benefits by excluding interest paid under these grants from the student loan interest deduction under Section 221.
- Regulatory and Reporting Requirements: Authorizes the Treasury Secretary to issue regulations and mandates reports from the Treasury (within 3 years) and the Comptroller General (within 5 years) on implementation, effectiveness, grant amounts, and fund disposition.
- Effective Date: Applies to taxable years beginning after the date of enactment.
Significant Changes to Existing Law The bill expands the scope of tax-free scholarships under Section 117 beyond traditional educational expenses to include post-graduation loan repayment programs tied to residency and work requirements. It also updates private foundation expenditure rules and student loan interest provisions to accommodate these new grants, creating a distinct category not previously covered.
Potential Impacts
- On Citizens: Recipients may receive tax-free loan repayment assistance, potentially reducing their tax liability and encouraging relocation to lower-degree-attainment areas.
- On Government Agencies: The IRS would administer the new exclusion and reporting rules; the Treasury and Government Accountability Office would prepare required studies on program outcomes.
- On International Relations: No direct impacts identified.
- Broader Effects: May increase participation in loan repayment programs by charitable organizations, with funds flowing to loan holders.
Main Stakeholders Affected
- Individuals with qualified education loans seeking post-graduation assistance.
- 501(c)(3) organizations, including private foundations and community trusts, that establish such grant programs.
- Communities with below-average bachelor's degree attainment rates.
- Holders of education loans who receive direct payments.
- Federal agencies (IRS, Treasury, GAO) responsible for oversight and reporting.
- Congress, through required periodic evaluations.
Notable Legal, Constitutional, or Political Implications The changes operate within existing tax authority under the Internal Revenue Code and do not appear to raise constitutional issues. The bill introduces new administrative requirements for reporting and regulation. It was introduced on a bipartisan basis in the House and referred to the Committee on Ways and Means.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Rep. Sewell, Terri A. [D-AL-7], Rep. Moolenaar, John R. [R-MI-2], Rep. Davids, Sharice [D-KS-3]
Recent Actions
- 2026-02-17: Referred to the House Committee on Ways and Means.
- 2026-02-17: Introduced in House
- 2026-02-17: Introduced in House
Bill Versions
- Workforce Development Through Post-Graduation Scholarships Act of 2026 — issued 2026-02-17 — PDF (6 pages)