Interest is subsidized by tax credits from the Federal government to the bond holders. In lieu of receiving periodic interest payments from the issuer, an eligible holder of a qualified zone academy bond is generally allowed annual federal income tax credits while the bond is outstanding. These credits compensate the holder for lending money to the issuer and function as payments of interest on the bond. Also requires the Treasury to adjust the credit allowance rate on a monthly basis to reflect changes in market interest rates. It is not possible to determine a uniform credit rate that would permit all qualified zone academy bonds to be issued at par.
Some borrowers are less creditworthy than others and, therefore, borrow at less favorable rates.
Any unused allocation by a state can be used in future years. Provide equipment for public school use. Develop course materials. Train teachers and other school personnel. Academic program must be designed in cooperation with the business to enhance the curriculum, increase graduation and employment rates, and better prepare students for the rigors of college and the workplace.