Student Loan Tax Elimination Act
Summary
The Student Loan Tax Elimination Act aims to remove origination fees on Federal Direct loans by amending the Higher Education Act of 1965. This bill, introduced in the Senate, seeks to repeal subsection (c) of section 455 of the Higher Education Act of 1965, which currently allows for these fees. The elimination of these fees would apply to loans for which the first disbursement is made on or after July 1 following the enactment of the Act.
Expected Effects
If enacted, the bill would reduce the upfront costs associated with federal student loans. This would primarily affect students who rely on these loans to finance their higher education. The change would be implemented for loans disbursed after a specific date following the Act's enactment.
Potential Benefits
- Reduced upfront costs for students taking out federal direct loans.
- Potentially increased access to higher education for students from lower-income backgrounds.
- Simplified loan process by removing a layer of fees.
- Could lead to decreased student loan debt accumulation over time.
- May encourage more students to pursue higher education.
Potential Disadvantages
- Potential decrease in government revenue due to the elimination of fees.
- The cost of eliminating the fees may need to be offset by other measures, potentially impacting other programs.
- The benefits may disproportionately favor those who are already likely to attend college.
- May lead to increased borrowing if students perceive loans as more affordable.
- The long-term impact on the student loan program's sustainability is uncertain.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution, as it aims to improve access to education. Article I, Section 8 grants Congress the power to collect taxes and provide for the general welfare of the United States. This bill modifies existing legislation related to student loans, which falls under Congress's purview to regulate commerce and provide for the general welfare through education funding.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).