NBC 10's I-Team has learned that the Rhode Island Student Loan Authority has agreed to return more than $9 million to the Internal Revenue Service.
The Rhode Island Student Loan Authority board of directors voted Friday to approve the Voluntary Closing Agreement Program (VCAP) for bond issuers who make student loans.
At issue was an interpretation of the tax law that pertains to the reallocation of student loans from one bond issue to another. These transfers, according to the authority, helped reduce servicing costs and expense of additional bond issues that other loan authorities use to reduce fees and interest on student loans.
As part of the VCAP agreement, the RISLA will return $9,008,854 to the IRS and will discontinue the practice of reallocating student loans from one bond issue to another.
"The return of the funds will not affect the amount of money available for student loans, or forgiveness of student loans in those cases that are eligible," said Noel Simpson, a RISLA spokesman.