President Joe Biden recently announced the cancellation of an additional $1.2 billion in student loan debt for approximately 153,000 borrowers during a meeting at the Culver City Julian Dixon Library in Culver City, CA. This move is part of the Biden administration's efforts to reduce the financial burden on students and borrowers.
In addition to the debt cancellation, the White House has also taken steps to address the issue of origination fees on federal student loans. These fees, which can range from 1% to 4% of the total borrowing amount, are seen as unnecessary by the administration. President Biden's 2025 budget includes a proposal to eliminate these fees, which are estimated to cost borrowers more than $1 billion annually.
Consumer advocates have praised the administration's actions, with Betsy Mayotte, president of The Institute of Student Loan Advisors, stating that eliminating origination fees will allow borrowers to borrow less to cover their costs. The White House described these fees as a "tax imposed on students by the government," highlighting the financial impact on borrowers, particularly teachers, nurses, and parents.
The White House also announced efforts to address harmful fees charged by certain banks on college accounts. The U.S. Department of Education is undergoing negotiated rulemaking to curb these fees, such as insufficient fund and closure fees. Financial institutions generated over $17.3 million in revenue from student bank accounts between 2021 and 2022, with students at historically Black colleges and universities and Hispanic-serving institutions paying particularly high fees on average.
Furthermore, the Education Department is considering ending automatic billing for textbooks and requiring colleges to return any unused financial aid funds for meal plans to students. These actions aim to provide students with more choice and value in their educational expenses.
Ultimately, the elimination of origination fees and other harmful bank fees would require congressional action, but there is bipartisan support for such changes, according to higher education expert Mark Kantrowitz. The Biden administration's efforts to reduce unnecessary fees and expenses for students are seen as a positive step towards making higher education more affordable and accessible for all.