"The federal government charged $1.6 billion in upfront fees on the student loans it issued last year, with most of that money coming out of the pockets of parents and graduate students," according to Credible.
"Originally intended to offset the cost of guaranteeing loans made by private lenders, the fees are no longer justified and should be abolished because the government became a direct lender in 2010.
That’s according to an analysis by a group that represents financial aid administrators at nearly 3,000 U.S. colleges, universities, and career schools.
The National Association of Student Financial Aid Administrators estimates that the upfront charges — taken out of all federal loans before students even see the money — cost the average undergraduate $235 in fees and interest, and the average graduate student $1,145.
In announcing the group’s analysis, NASFAA President Justin Draeger characterized the fees as an 'unnecessary and outdated tax.'
'It is unconscionable that the average undergraduate student will pay $235 in origination fees and associated interest over 10 years on an artifact of the prior loan system,' Draeger said.
The fees — currently 1.066 percent for federal direct loans, and 4.264 percent for federal PLUS loans — increase the annual percentage rate (APR) on federal loans.
For parents and graduate students taking out the average PLUS loan of $23,986, a fee of $1,023 is deducted right off the bat. But the student or their parent still owe the full amount — with interest."
NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.
Publication Date: 11/27/2017