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White House targets ‘junk fees’ on student loans and other higher education costs

While most private lenders have done away with student loan origination fees, the federal government still charges them. Federal student loan borrowers can face expenses of 1% to 4% of their total borrowing amount. President Joe Biden’s 2025 budget, released earlier this week, calls for the end of these fees.

The White House said on Friday it considers these expenses to be “junk fees,” defined as “hidden costs or surprise fees that companies and institutions include on customer or student bills, increasing their costs.”

Consumer advocates praised Biden’s efforts.

“By eliminating origination fees on federal student loans, borrowers should be able to borrow less to cover their costs,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.