IHELA was initially established for the purpose of financing education loans through the investment of private capital. In 1985, the Legislature expanded the function of the Authority to finance the acquisition, construction and renovation of educational facilities, structures and equipment, and to refund, refinance, or reimburse outstanding indebtedness incurred by eligible Iowa independent institutions. In 1997, the Legislature amended and expanded the function of the Authority for a project that is to be leased by the authority to an institution and to provide for loans in anticipation of the receipt of tuition by an institution. The Legislature also removed a restriction that IHELA shall not have outstanding, at any given time, obligations issued in an aggregate principal amount exceeding $150 million. In 2000, the legislature further amended Chapter 261A to provide that interest on obligations issued by the Authority is exempt from state income tax and to authorize the Authority to finance facilities that will be leased to institutions by a third party.
Bonds issued by the IHELA are special and limited obligations of the Authority and do not place an obligation on, or have the guarantee of, the State of Iowa. All administrative expenses of the Authority are paid from funds provided through the operation of its programs. The Authority has never received any appropriations from the State of Iowa.