Smucker Introduces Student Loan Tax Elimination Act
Legislation would eliminate hidden fees on federal student loans
Washington, DC—Rep. Lloyd Smucker (PA-11), a member of the Education and Workforce Committee, 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. I appreciate Sen. Braun’s leadership for introducing this legislation in the Senate and I look forward to advancing companion legislation in the House,” said Rep. Smucker.
Senator Mike Braun (R-IN) introduced this legislation in the United States Senate. Braun introduced the legislation with the support of by Sens. Sinema (I-AZ), Hawley (R-MO), Warren (D-MA), Kaine (D-VA), Coons (D-DE), and Van Hollen (D-MD).
“We must do what we can to ease the burden on American students, like removing unnecessary taxes for student borrowers. I’m proud to lead this bipartisan bill to eliminate a tax that is not good for borrowers or taxpayers,” said Sen. Braun.
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 over $6.7 billion over a five year period, according to a report from the National Association of Student Financial Aid Administrators.