FOR IMMEDIATE RELEASE
Contact: Allie Arcese
Sr. Director, Strategic Communications
[email protected]

WASHINGTON, D.C., DECEMBER 18, 2025 — This week, Sens. Tim Kaine (D-Va.) and Jim Banks (R-Ind.) reintroduced the Student Loan Tax Elimination Act, which would remove outdated "origination fees" on federal student loans, which essentially operate as a hidden tax on student loan borrowers. 

Origination fees — anywhere from 1% to 4% taken off the top of a student loan — are a relic of the bank-based guaranteed student loan program, where these fees were used to offset subsidies to lenders. This means that students do not receive the full amount of their loan, and consequently can be left without the financial resources to cover their expenses. To make matters worse, interest accrues on the origination fee, meaning borrowers must pay interest on dollars they never receive. 

Today, origination fees serve primarily as a tool for reducing the federal budget deficit. The federal government charged $1.7 billion in origination fees in 2023-24, and collected more than $6.5 billion in origination fees from students and parents from 2020-21 to 2023-24, according to a NASFAA analysis. 

NASFAA has long urged Congress to eliminate student loan origination fees, a move that has bipartisan support and would improve transparency and affordability in the federal student aid system.

NASFAA President & CEO Melanie Storey released the following statement in support of the Student Loan Tax Elimination Act:

"For years, NASFAA has raised concerns about the inequities created by student loan origination fees, which reduce the amount of aid students actually receive while increasing the cost of borrowing. 

The Student Loan Tax Elimination Act ensures federal student loans include only the funds needed to support educational costs — eliminating a hidden tax on students and families  — and provides a key step toward greater transparency and affordability."

NASFAA policy experts are available to speak to members of the media about student loan origination fees. To set up an interview, please email [email protected].

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About NASFAA

The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 29,000 financial aid professionals at approximately 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every 10 undergraduates in the U.S. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators.