President Joe Biden announces cancellation of an additional $1.2 billion in student debt for approximately 153,000 borrowers, during a community meeting at the Culver City Julian Dixon Library in Culver City, California .
Irfan Khan | Los Angeles Times | Getty Images
The White House is reporting on its actions to reduce student spending, including waiving student application fees. student loans.
The “reforms would save students and borrowers billions in unnecessary fees and improve the education and loan repayment experience,” according to a report. statement of the Biden administration released Friday.
While most private lenders have waived student loan origination fees, the federal government continues to charge them. Federal student loan borrowers may face expenses ranging from 1% to 4% of their total loan amount. That of President Joe Biden Budget 2025published at the start of the week, calls for an end to these fees.
The White House said Friday that it considers these expenses to be “unwanted charges,” defined as “hidden costs or surprise fees that businesses and institutions include on customer or student bills, thereby increasing their costs.” .
Consumer advocates praised Biden’s efforts.
“By eliminating origination fees on federal student loans, borrowers should be able to borrow less to cover their costs,” said Betsy Mayotte, president of The Institute of Student Loan Advisorsa non-profit organization.
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About 7 million undergraduate, graduate and parent borrowers pay origination fees, which the White House has described as “nothing more than a tax imposed on students by the government, costing consumers more than ‘a billion dollars a year’.
A typical teacher or nurse who takes out a federal loan to earn undergraduate and graduate degrees will pay $1,000 or more over the life of their loan because of these fees, the White House said in a statement released Friday .
“Parents often fare even worse, with the average borrowing parent paying an additional $2,800 or more,” it says.
Ultimately, eliminating these fees would require an act of Congress, said higher education expert Mark Kantrowitz.
But he added: “There is bipartisan support for such a change.”
End of university bank fees and textbook fees
The White House also said Friday that the U.S. Department of Education is negotiating rules to reduce “harmful fees” on college accounts charged by some banks. For example, the department is seeking to prohibit financial institutions that contract with colleges from charging non-sufficient funds and closure fees.
Between 2021 and 2022, financial institutions generated more than $17.3 million in revenue from more than 650,000 student bank accounts, noted the Consumer Financial Protection Bureau. These banks can charge students overdraft fees of up to $36, among other fees, even as many other financial institutions have stopped such practices.
Account holders historically Black colleges and colleges, or HBCUs, and Hispanic-serving institutions paid particularly high fees on average, according to the CFPB.
The Education Department is also considering ending automatic tuition billing for textbooks, the White House said.
“Competitive markets provide consumers with choice and value, but automatic fees for textbooks and course materials leave students with little opportunity to meaningfully shop around for better prices or use free and open source textbooks” , said the Biden administration.
Additionally, it plans to require colleges to return any unused financial aid funds for meal plans to students.
