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Smucker, Davids Introduce Student Loan Tax Elimination Act

May 1, 2025

WASHINGTONReps. Lloyd Smucker (PA-11) and Sharice Davids (KS-03) have introduced the Student Loan Tax Elimination Act. The legislation would eliminate a hidden tax on federal student loans, which adds unnecessary debt to student loan borrowers.  

“Students and parents should fully understand the terms and costs associated with borrowing for their education. Unfortunately, federal loan programs have hidden fees which negatively impact students. Loan origination fees are a hidden tax which ultimately inflate costs for students. Eliminating this fee would be a step in the direction of lowering the cost of higher education for students across the nation.” said Representative Smucker (PA-11).

“Students working hard to invest in their future through education shouldn’t be weighed down by hidden administrative fees. With the rising cost of higher education already making it harder for graduates to buy a home, launch a business, or contribute fully to our economy, this bill takes a meaningful step toward reducing that burden. By eliminating certain unnecessary and costly fees, we’re helping ensure that a college degree leads to opportunity — not obstacles.” – Representative Sharice Davids (KS-03)

Background:

As a result of legislation passed in 2010, all federal student loans issued through the U.S. Department of Education were taken out of the hands of private lenders and issued directly by the Department. Despite the elimination of private lenders in the federal loan process, students are still being charged administration fees on student loans. This hidden tax adds billions of dollars to student debt every year.

The Student Loan Tax Elimination Act would eliminate origination fees for federal student loans, which cost nearly $6.5 billion over a four year period, according to a report from the National Association of Student Financial Aid Administrators.

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