H.F. 2760 Section 1. NEW SECTION . 256.232 Attorney loan repayment 1 program —— fund. 2 1. Program established. The college student aid commission 3 shall establish an attorney loan repayment program to encourage 4 attorneys to remain and practice law in this state. 5 2. Eligibility. An individual is eligible to apply to 6 enter into a program agreement with the college student aid 7 commission pursuant to subsection 3 if the individual meets all 8 of the following requirements: 9 a. Is a graduate of an accredited law school. 10 b. Is licensed to practice law in Iowa. 11 c. Is practicing law in Iowa at the time of application or 12 commits to begin practicing law in this state upon execution 13 of a program agreement. 14 3. Program agreements. An agreement shall be entered into 15 by an eligible attorney and the college student aid commission. 16 Under the agreement, to receive loan repayments pursuant to 17 subsection 5, an eligible attorney shall agree to and fulfill 18 all of the following requirements: 19 a. Remain and practice law in Iowa in the area designated 20 pursuant to the attorney’s preference determination during each 21 year for which loan repayment assistance is received. 22 b. Provide not less than the number of hours per year of 23 legal services as an indigent defense attorney as designated 24 pursuant to the attorney’s preference determination. 25 4. Priority. 26 a. In awarding loan repayment assistance under this section, 27 the commission shall give priority to attorneys who practice 28 law in this state in the following order: 29 (1) Attorneys who reside and practice law in rural areas 30 of the state and provide a minimum of fifty hours of indigent 31 defense services annually. 32 (2) Attorneys who practice law in rural areas of the state 33 and provide a minimum of one hundred hours of indigent defense 34 services annually. 35 -1- LSB 5083HZ (2) 91 mb/jh 1/ 5

H.F. 2760 (3) Attorneys who practice law in Iowa and provide two 1 hundred hours of indigent defense services annually. 2 (4) Attorneys who graduated from an Iowa law school, an 3 Iowa high school, or completed private instruction pursuant to 4 chapter 299A. 5 b. For purposes of this section, “rural area” means a county 6 or municipality that has a population of less than twenty-six 7 thousand and is located more than twenty miles from a city with 8 a population of at least fifty thousand, based on the most 9 recent federal decennial census. 10 5. Loan repayment assistance. An eligible attorney 11 who enters into and remains in compliance with a program 12 agreement pursuant to subsection 3 shall receive loan repayment 13 assistance in an amount not to exceed ten thousand dollars per 14 year or the outstanding balance of the attorney’s eligible 15 loans, whichever is less. In the event an attorney who 16 receives loan repayment assistance under this section ceases 17 to practice law in accordance with the program agreement, the 18 loan repayment assistance shall terminate immediately, the 19 loan repayment assistance shall be prorated for the months the 20 attorney complied with the agreement, and no further payment 21 shall be made. Loan repayment assistance may be provided for 22 each year of eligible practice during a period of not more than 23 six consecutive years. The total amount of loan repayment 24 assistance an attorney may receive under the program shall 25 not exceed the total outstanding balance of the attorney’s 26 eligible student loans at the time the program agreement 27 is executed. For purposes of this section, “eligible loan” 28 means the attorney’s total federally guaranteed Stafford loan 29 amount under the federal family education loan program or the 30 federal direct loan program, the attorney’s federal graduate 31 plus loans, or the attorney’s federal Perkins loan, including 32 principal and interest. Loan payment assistance received 33 pursuant to this section is not subject to Iowa income tax. 34 6. Fund established. An attorney loan repayment program 35 -2- LSB 5083HZ (2) 91 mb/jh 2/ 5

H.F. 2760 fund is created in the state treasury under the control of the 1 college student aid commission. The commission may accept 2 gifts, grants, bequests, and other private contributions, as 3 well as state or federal moneys, for deposit in the fund. All 4 moneys deposited in the fund are appropriated to the commission 5 to be used for purposes of this section. Notwithstanding 6 section 8.33, moneys in the fund that remain unencumbered or 7 unobligated at the close of a fiscal year shall not revert 8 but shall remain available for expenditure for the purposes 9 designated. Notwithstanding section 12C.7, subsection 2, 10 interest or earnings on moneys in the fund shall be credited 11 to the fund. 12 7. Rules. The college student aid commission shall adopt 13 rules to administer this section. 14 8. Limitation. The program shall not provide assistance for 15 more than twenty-five attorneys in a single year. 16 Sec. 2. Section 422.7, Code 2026, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 46. a. Subtract, to the extent included, 19 income resulting from the payment of the amount of any loan 20 repayment assistance received pursuant to section 256.232, 21 whether paid to the taxpayer or the lender, not to exceed ten 22 thousand dollars in any tax year. 23 b. If the taxpayer has a deduction in computing federal 24 taxable income under section 221 of the Internal Revenue Code 25 for interest on a qualified education loan, the taxpayer shall 26 recompute for purposes of this subsection the amount of the 27 deduction under paragraph “a” by not subtracting any amount of 28 income resulting from the loan repayment assistance received 29 pursuant to section 256.232 that was also deducted by the 30 taxpayer under section 221 of the Internal Revenue Code. 31 c. A taxpayer is eligible to receive a deduction pursuant to 32 this subsection for not more than six consecutive tax years in 33 the taxpayer’s lifetime. 34 EXPLANATION 35 -3- LSB 5083HZ (2) 91 mb/jh 3/ 5

H.F. 2760 The inclusion of this explanation does not constitute agreement with 1 the explanation’s substance by the members of the general assembly. 2 This bill establishes an attorney loan repayment program 3 to encourage attorneys to remain and practice law in Iowa. 4 The program is to be administered by the college student aid 5 commission. 6 The bill provides that an individual is eligible to apply for 7 the program if the individual is a graduate of an accredited 8 law school, is licensed to practice law in Iowa, and is 9 practicing law in Iowa at the time of application or commits to 10 begin practicing law in the state upon execution of a program 11 agreement. 12 The bill requires a program agreement to be entered into by 13 the commission and an eligible attorney. Under the agreement, 14 an attorney must agree to remain and practice law in Iowa 15 during each year for which loan repayment assistance is 16 received and must provide not less than the number of hours 17 per year of legal services as an indigent defense attorney as 18 designated pursuant to the attorney’s preference determination. 19 The bill requires the commission to give priority in 20 awarding loan repayment assistance to attorneys who practice 21 law in this state in the following order: (1) attorneys who 22 reside and practice law in rural areas and provide a minimum of 23 50 hours of indigent defense services annually; (2) attorneys 24 who practice law in rural areas and provide a minimum of 100 25 hours of indigent defense services annually; (3) attorneys who 26 practice law in the state and provide 200 hours of indigent 27 defense services annually; and (4) attorneys who graduated from 28 an Iowa law school, Iowa high school, or completed private 29 instruction pursuant to Code chapter 299A. 30 The bill defines “rural area” as a county or municipality 31 that has a population of less than 26,000 and is located more 32 than 20 miles from a city with a population of at least 50,000, 33 based on the most recent federal decennial census. 34 The bill provides that an eligible attorney who enters 35 -4- LSB 5083HZ (2) 91 mb/jh 4/ 5

H.F. 2760 into and remains in compliance with a program agreement may 1 receive loan repayment assistance in an amount not to exceed 2 $10,000 per year or the outstanding balance of the attorney’s 3 eligible student loans, whichever is less. If an attorney 4 who receives assistance ceases to practice law in accordance 5 with the attorney’s program agreement, the assistance shall 6 terminate, be prorated, and no further payments shall be made. 7 Loan repayment assistance may be provided for not more than 8 six consecutive years, and the total amount of assistance may 9 not exceed the outstanding balance of the attorney’s eligible 10 student loans at the time the agreement is executed. The bill 11 defines “eligible loan” as the attorney’s total federally 12 guaranteed Stafford loan amount under the federal family 13 education loan program or the federal direct loan program, 14 the attorney’s federal graduate plus loans, or the attorney’s 15 federal Perkins loan, including principal and interest. 16 The bill creates an attorney loan repayment program fund 17 in the state treasury under the control of the commission. 18 The fund consists of gifts, grants, bequests, private 19 contributions, and state or federal moneys. Moneys in the fund 20 are appropriated to the commission for purposes of the program, 21 do not revert at the end of a fiscal year, and retain interest 22 earnings. 23 The bill requires the commission to adopt rules to 24 administer the program and limits participation to not more 25 than 25 attorneys in a single year. 26 The bill provides that loan payment assistance received 27 pursuant to the program is not subject to the Iowa income tax. 28 The bill adds a corresponding provision. 29 -5- LSB 5083HZ (2) 91 mb/jh 5/ 5