Stimulus Law Offers Breaks for Public-College Bond Issues

A lesser-known part of the stimulus package:

Tucked into the economic-stimulus package signed into law last month by President Obama is a new financial tool, Build America Bonds, that could help public colleges and public academic medical centers save money when borrowing for capital projects.

The bonds, which are available to government issuers but not private colleges, would be taxable securities subsidized by the federal government.

The subsidy would come in one of two ways. In some instances, buyers of the bonds would receive a tax credit equal to 35 percent on the interest payments they received; in other cases, the issuers of the bonds would receive a subsidy from the federal government equal to 35 percent of the interest they are paying.