The Student Loan Tax Elimination Act would eliminate origination fees that the federal government currently charges on Direct loans made through the Federal Direct Loan Program. These fees—currently deducted from loan disbursements—represent a cost to borrowers on top of interest rates. The bill would apply to all new Federal Direct loans and consolidation loans starting July 1 following enactment. This change would affect millions of students and borrowers taking out federal student loans going forward. The legislation does not specify new funding requirements, as eliminating fees would reduce federal revenues from the loan program rather than require new spending.
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