The White House is proposing tweaks to the student-loan program that could make the loans less costly for borrowers. As part of the White House budget proposal released Monday, the Biden administration is asking Congress to eliminate origination fees on student loans and make permanent a COVID-era law that excludes some student-loan forgiveness from income for tax purposes, MarketWatch.com reported. The proposals on student debt fit into the White House’s broader efforts to find ways to reform the student-loan system after the Supreme Court struck down President Joe Biden’s plan to cancel student debt for a wide swath of borrowers. The budget proposals are far from established law. Instead, the document is a signal to Congress and the public of the president’s priorities. Still, there may be appetite in Congress to take up some of the president’s proposals, including the plan to ax student-loan origination fees. Bipartisan legislation that would do just that is currently working its way through Congress. Federal loans for undergraduates carry a 1% origination fee. As a result of the fees, “students borrow a dollar but only get 99 cents for their educational expenses,” Undersecretary of Education James Kvaal told reporters Monday. Graduate students and parents using the government’s PLUS program pay an even steeper origination fee of 4%. The average graduate student in a two-year program pays roughly $1,287 in fees if they’re paying back the debt on a 10-year timeline, according to a 2023 analysis from the National Association of Student Financial Aid Administrators. For the average undergraduate student in a four-year program, that cost could come to $231 over 10 years, NASFAA found.
