On Tuesday, June 4, a bipartisan group of senators introduced a bill that would amend the Higher Education Act of 1965, eliminating origination fees on student loans borrowed from the federal government. Known as the Student Loan Tax Elimination Act, the bill was spearheaded by Senators Mike Braun (R-Ind.), Rick Scott (R-FL), Chris Coons, (D-DE), and Krysten Sinema (D-AZ), with the intention of reducing the financial burden on students using federal loans to fund their higher education.
According to the National Association of Student Financial Aid Administrators (NASFAA), the average undergraduate borrower enrolled in a four-year program pays $294 in origination fees and associated interest if the borrower is enrolled in a standard 10 year repayment plan. The average graduate student enrolled in a 2-year program would pay $1,174 in origination fees and interest if the borrower’s repayment plan was a standard 10 year plan. In addition, NASFAA states that the federal government generated $1.7 billion of revenue in federal origination fees in the 2017-2018 award year alone.
Senator Braun remarked on the origination fees as “nothing more than a hidden tax that burdens students”, going on to say that the bill “offers one solution to our broken higher education system that fails to put students first.” The proponents of the Student Loan Tax Elimination Act hope that the proposed bill will enable more Americans to better afford a higher education, increasing their opportunities for success. Citizens interested in taking action in favor of this bill should contact their Congressmen and express their support for the elimination of federal student loan origination fees.
Source: NASFAA