NASFAA Mention: 'Hidden Student Loan Tax' Could Come to an End With Smucker's Latest Bill

"Extra fees tacked onto federal students loans could be no more, saving students $1.7 billion per year, according to bipartisan legislation by U.S. Reps. Lloyd Smucker (R-PA), Susan Davis (D-CA) and Sharice Davids (D-KS)," Lancaster Online reports.

"This legislation, introduced Wednesday, would eliminate a 'hidden student loan tax' called origination fees, for direct federal student loans. These fees range from one to four percent and typically total a few hundred dollars, added to the cost of the federal student loan and its interest.

... This 'hidden student loan tax' has generated $8.3 billion in revenue to the federal government over the past five academic years, according to the National Association of Student Financial Aid Administrators.

If passed, it would only apply to future borrowers and not retroactively.

In a call from the Capitol on Thursday, Smucker said these fees are a 'relic of the past,' from when loans were backed by banks, instead of direct federal loans that are the primary source today.

'That's one small piece that we can do to help ease that burden,' Smucker said. Davis has led an effort to repeal this measure for several years, Smucker said."

NASFAA's "Notable 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: 7/12/2019

View Desktop Version