The differential interest costs to rural governments associated with borrowing in the tax-exempt bond market is a function of the advantageous position of several large partially rural counties and the dominance of school district borrowing in rural communities, rather than a disadvantage of predominantly rural governments. This conclusion is the result of a number of regression equations estimated from a unique 1982 data set that combines socioeconomic, financial, and governmental information. Of primary importance to rural development policymakers and practitioners is that highly rural governments paid rates roughly equivalent to the most urban borrowers on publicly offered debt issued during 1982. Suburban governments benefitted from lower interest rates than others on general obligation (GO) bonds sold by nonschool governments, but they had no comparative advantage in issuing revenue bonds or school bonds. Nonschool governments located outside metropolitan areas, as a group, paid lower rates than did their metropolitan counterparts on GO bond issues. Like suburban issuers, nonmetropolitan issuers did not enjoy the same savings on their revenue and school bond sales. Rural governments were as successful in selling long-term municipal bonds as were urban governments during the volatile market of 1982. Rural interest rates were comparable to rates paid by urban issuers. (JHZ)