NASFAA Mention: Covid Relief Legislation May Trigger Higher Student Loan Fees—But Here’s Why You Shouldn’t Worry Just Yet

"On Feb 27, the House Democrats passed a $1.9 trillion Covid relief bill and sent the legislation to the Senate," CNBC reports. "The American Rescue Plan increases the child tax credit, provides $30 billion for emergency rental assistance, funds a third stimulus payment and extends boosted unemployment benefits. The bill also appropriates nearly $40 billion to extend the Higher Education Emergency Relief Fund, which provides support to struggling colleges and students, through September 2023. Many Americans say policies such as these are still desperately needed."

"But because of a 2011 law signed by then President Barack Obama, spending increases and tax cuts that add to the deficit — including last year’s CARES Act as well as this newly proposed legislation — trigger automatic spending cuts the following calendar year. 

As a result, the Office of Management and Budget says origination fees on federal student loans may be modestly increased in the 2021 fiscal year because of mandatory cuts.

... The National Association of Student Financial Aid Administrators has been 'pushing for years for Congress to eliminate student loan origination fees,' says Erin Powers, NASFAA’s director of marketing and communications. She describes origination fees as 'a hidden tax on student loan borrowers.'"

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.


Publication Date: 3/2/2021

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