The Capitol building can be seen above during the sunset.

At Capitol Hill in Washington, student loan origination fees received some heat from critics who argued they were “burdensome and represented a tax on students. The critics, a team from the National Association of Student Financial Aid Administrators (NASFAA), attempted to lobby Washington lawmakers to end origination fees during a meeting with members of the House Committee on Education and the Workforce.

Origination fees are often seen as a large burden to a student loan applicant. They are viewed as a remnant of the stake that private banks and lenders had in the student loan industry before the federal government took over. However, these origination fees are still charged by the Federal government.

Origination fees simply detract from the usefulness of a federal student loan from the student’s perspective. A recipient would only receive part of the loan after the origination fee, but he or she would still need to pay the full principal balance along with interest.

The National Association of Student Financial Aid Administrators (NASFAA) is an advocate for students, and this latest advocacy effort is part of the Advocacy Pipeline that NASFAA has created to bring policy makers and elected members together with on the grounded perspectives from student leaders. This initiative is just beginning, but so far, the NASFAA members have worked hard to establish direct advocacy options for student leaders.

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So what does this mean?

For student loan borrowers, a successful lobbying attempt would hopefully reduce the cost of a federal student loan. Whether this means the elimination or reduction of the standard origination fee remains to be seen. For those with student loans, this approach to student loan policy would be nothing but good news, provided that lobbying is done in their interests. At any rate, it would be a long journey towards the end of the fee given the gridlocked government procedures.

Further to this, a successful lobbying attempt would set a precedent on Capitol Hill. The ability to have direct advocacy in the government would make NASFAA a much more significant power for student borrower rights. Not only have they put a focus on origination fees, but the group has also advocated for the public service loan forgiveness program.

image copyright Thomas Hawk