A bipartisan group of senators on Tuesday introduced a bill that would remove federal student loan origination fees, which essentially function as a hidden tax on student loans.
The senators—Mike Braun (R-IN), Kyrsten Sinema (D-AZ), Rick Scott (R-FL), and Chris Coons (D-DE)—said in a press release that origination fees add "unnecessary debt" to borrowers’ overall student loan costs.
NASFAA has long advocated for the removal of student loan origination fees, which generated a staggering $1.7 billion in revenue for the federal government in award year 2017-18, and $8.3 billion over the past five award years. NASFAA members also frequently discuss the issue origination fees pose for students in visits to Capitol Hill through the Advocacy Pipeline.
"We applaud Sens. Braun, Sinema, Scott, and Coons for putting forward a bipartisan legislative fix to end the hidden student loan tax," said NASFAA President and CEO Justin Draeger. "A longtime priority of financial aid administrators, eliminating origination fees will decrease the cost of college and increase student and parent understanding of the federal student loan program. We call on all members of Congress to join the growing bipartisan movement to eliminate these hidden fees."
Origination fees "are nothing more than a hidden tax that burdens students," Braun said in a statement. "This legislation is a step forward and offers one solution to addressing our broken higher education system that fails to put students first."
The senators included information from NASFAA in the announcement of the bill, dubbed the Student Loan Tax Elimination Act of 2019, including data showing the average undergraduate borrower in a four-year program will pay an estimated $294 in origination fees and associated interest if enrolled in a standard 10-year repayment plan, while the average graduate student in a two-year program will pay about $1,174 in fees and interest on that fee if repaying over 10 years.
"The cost of college places an ever-increasing burden on a growing number of Americans," Coons said in a statement. "I’m proud to support this measure to reduce the student loan burden for students in Delaware and across the country."
Publication Date: 6/5/2019