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Origination Fees. NASFAA Issue Brief [Updated]

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Title: Origination Fees. NASFAA Issue Brief [Updated]
Language: English
Authors: National Association of Student Financial Aid Administrators (NASFAA)
Source: National Association of Student Financial Aid Administrators. 2025.
Availability: National Association of Student Financial Aid Administrators. 1101 Connecticut Avenue NW Suite 1100, Washington, DC 20036. Tel: 202-785-0453; Fax: 202-785-1487; e-mail: membership@NASFAA.org; Web site: http://www.nasfaa.org
Peer Reviewed: N
Page Count: 2
Publication Date: 2025
Document Type: Reports - Descriptive
Education Level: Higher Education
Postsecondary Education
Descriptors: Student Financial Aid, Student Loan Programs, Fees, Federal Aid, Government Role, Income, Federal Legislation, Educational Legislation, Higher Education
Laws, Policies and Program Identifiers: Higher Education Act 1965, Federal Direct PLUS Loan Program, Federal Direct Student Loan Program
Abstract: The Higher Education Act of 1965, as amended, specifies a loan origination fee of 1 percent for all Direct Subsidized Loans and Direct Unsubsidized Loans, and a fee of 4 percent for all Direct PLUS Loans for both parent borrowers and graduate and professional student borrowers. Student loan origination fees, the hidden student loan tax, generated a staggering $1.7 billion in revenue for the federal government in award year 2023-24, and $6.5 billion over the past four award years. The average undergraduate borrower in a four-year program will pay an estimated $227 in origination fees and associated interest if enrolled in a standard 10-year repayment plan, while the average graduate student in a two-year program pays about $1,370 in fees and interest on that fee if repaying over 10 years. Origination fees, a relic of bank-based student lending, increase complexity in the federal student loan system and should be eliminated.
Abstractor: ERIC
Entry Date: 2025
Accession Number: ED672059
Database: ERIC
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  Data: Origination Fees. NASFAA Issue Brief [Updated]
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  Data: National Association of Student Financial Aid Administrators. 1101 Connecticut Avenue NW Suite 1100, Washington, DC 20036. Tel: 202-785-0453; Fax: 202-785-1487; e-mail: membership@NASFAA.org; Web site: http://www.nasfaa.org
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  Data: The Higher Education Act of 1965, as amended, specifies a loan origination fee of 1 percent for all Direct Subsidized Loans and Direct Unsubsidized Loans, and a fee of 4 percent for all Direct PLUS Loans for both parent borrowers and graduate and professional student borrowers. Student loan origination fees, the hidden student loan tax, generated a staggering $1.7 billion in revenue for the federal government in award year 2023-24, and $6.5 billion over the past four award years. The average undergraduate borrower in a four-year program will pay an estimated $227 in origination fees and associated interest if enrolled in a standard 10-year repayment plan, while the average graduate student in a two-year program pays about $1,370 in fees and interest on that fee if repaying over 10 years. Origination fees, a relic of bank-based student lending, increase complexity in the federal student loan system and should be eliminated.
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      – Text: English
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      – SubjectFull: Student Loan Programs
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      – SubjectFull: Fees
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      – SubjectFull: Federal Aid
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      – SubjectFull: Government Role
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      – SubjectFull: Income
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      – SubjectFull: Federal Legislation
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      – SubjectFull: Higher Education Act 1965
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      – SubjectFull: Federal Direct PLUS Loan Program
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      – SubjectFull: Federal Direct Student Loan Program
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      – TitleFull: Origination Fees. NASFAA Issue Brief [Updated]
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