Letter to Hon. Mitch McConnel, Senate Majority Leader, Hon. Charles Schumer, Senate Minority Leader, Hon. Nancy Pelosi, Speaker of the House, Hon. Kevin McCarthy, House Minority Leader - Sinema to Congressional leaders: Waive Student Loan Origination Fees During COVID-19 Pandemic

Letter

Dear Leader McConnell and Leader Schumer:

We write to request that the next coronavirus relief package prioritize students' ability to begin or continue their higher education by providing zero origination fees for federal student loans. The Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136) took a number of important steps to support universities and students, including deferments for federal student loans during this crisis. As we discuss policy priorities for the next legislative package, we ask that you continue that support.

The COVID-19 pandemic has jeopardized the health and livelihoods of millions of students across the country. As students experience financial strain due to lost jobs or income, many will need to take out student loans to cover the cost of higher education or will be forced to leave school entirely. Higher education institutions are already experiencing severe revenue shortfalls, which would be further exacerbated by tuition revenue losses if students defer their admissions or decline to enroll due to financial constraints.

The Department of Education announced on March 25 that it will stop collection actions and wage garnishments from March 13, 2020 until May 12, 2020. The department also announced all borrowers with federally held student loans will have interest rates set at zero percent for a period of at least 60 days, which Congress extended to 6 months. Borrowers also have the option to suspend their payments for at least two months. Putting an end to origination fees in the next coronavirus relief package would build on these actions already taken by Congress and the Department of Education.

Origination fees are an unnecessary barrier, an antiquated relic from when the federal government guaranteed loans instead of administering them directly, for vulnerable students to obtain the loans they need to start or continue school. The average undergraduate student in a four-year program will pay an estimated $235 in fees and associated interest on student loans. In June 2019, we introduced the Student Loan Tax Elimination Act to eliminate federal student loan origination fees, increase the affordability of education, and lessen the burden on students borrowing for college. Furthermore, it has been repeatedly proven that origination fees bring in less revenue than the Congressional Budget Office projects, making origination fees a danger to yearly budgeting. At a time when government spending is at an all-time high, we cannot afford these budgeting gimmicks.

In order to encourage students to begin or continue their college careers, we ask that the next coronavirus relief bill eliminate origination fees for any loan initially disbursed after enactment of the upcoming fourth supplemental appropriations bill.

Thank you for your support of these critical investments in our nation's students and institutions of higher learning.