§ 16577 District Debt Refinancing Limits

• •A school district can borrow money from the U.S. government to pay off old debts.
• •The new loan can't be bigger than the old debt.
• •The interest on the new loan can't be more than 8% per year.
• •The borrowed money can only be used to pay off the old debt, nothing else.

A school district owes $100,000 for building a new school. They find a loan from the U.S. government with lower interest.

The district can take this new loan to pay off the old $100,000 debt, but they can't borrow more than $100,000 or use the money for anything else. The new loan's interest must be 8% or less per year.