Bonds issued to finance student loans will not become taxable if their issuer takes action to cease being a qualified scholarship funding corporation, the Internal Revenue Service said.

The IRS reached this conclusion in a private-letter ruling that was dated April 7 but was not made public until July 10. The ruling, which did not name the issuer, was signed by James Polfer, chief of the tax-exempt bond branch of the IRS chief counsel's office.

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