Kaine, Colleagues Introduce Bipartisan Bill to Remove Student Loan Tax

WASHINGTON, D.C. – This week, U.S. Senator Tim Kaine teamed up with U.S. Senators Mike Braun (R-IN), Kyrsten Sinema (I-AZ), Elizabeth Warren (D-MA), Josh Hawley (R-MO), Chris Coons (D-DE) and Chris Van Hollen (D-MD) to introduce the bipartisan Student Loan Tax Elimination Act, legislation to remove an antiquated tax that adds debt to student loan borrowers.

“Everyone loses when Virginia students are confronted with massive amounts of debt,” said Kaine. “It’s critical that we do more to make education affordable, including by getting rid of an antiquated fee that essentially taxes student loan borrowers for no reason. This bipartisan, commonsense legislation would do that.”

The legislation would eliminate “origination fees,” which are hidden taxes included in federal student loans. Historically, these fees existed to offset the costs of private-sector partners who serviced federal student loans. Despite the fact that private-sector partners no longer service federal student loans, the fees have not yet been eliminated.

As a result, before a federal student loan is disbursed, an origination fee is still deducted from the amount of money a student borrower is loaned. Therefore, student borrowers receive a smaller loan than expected, and are still required to pay back the total amount of their loan before the fee was deducted—with interest.

The full text of the legislation is available here.

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