WASHINGTON, D.C. (WAVY ) – Senator Tim Kaine, along with other colleagues such as Senator Mike Braun (R-IN) and Elizabeth Warren (D-MA), teamed up this week to introduce the Student Loan Tax Elimination Act.
According to a press release, the bipartisan legislation would eliminate ” origination fees,” which are hidden taxes included in federal student loans.
“Everyone loses when Virginia students are confronted with massive amounts of debt,” said Kaine. “It’s critical that we do more to make education affordable, including by getting rid of an antiquated fee that essentially taxes student loan borrowers for no reason. This bipartisan, commonsense legislation would do that.”
These fees used to be added to student loans to offset the cost of private-sector partners who serviced federal student loans. The fee was deducted before the loan is disbursed and was subtracted from the amount of money the student borrower is loaned.
Because of this, borrowers would get a smaller loan than expected but are still required to pay back the amount of the loan before the fee was deducted with interest.
To read the full legislation, click here.