H.R.3165 - Student Loan Tax Elimination Act (119th Congress)
Summary
H.R.3165, the Student Loan Tax Elimination Act, aims to amend the Higher Education Act of 1965 by eliminating origination fees on Federal Direct loans. The bill proposes to repeal subsection (c) of section 455 of the Higher Education Act of 1965, which currently authorizes these fees. The amendment would apply to loans for which the first disbursement is made, or consolidation loan applications are received, on or after July 1 following the enactment of the Act.
Expected Effects
The primary effect of this bill would be to reduce the overall cost of Federal Direct loans for students. This would be achieved by removing the origination fees, which are charged as a percentage of the loan amount. The change would be applicable to new loans disbursed after the specified effective date.
Potential Benefits
- Reduces the overall cost of borrowing for students, making higher education more accessible.
- Simplifies the loan process by removing a layer of fees.
- Potentially decreases student loan debt burden upon graduation.
- Could encourage more students to pursue higher education.
- May improve students' financial stability post-graduation.
Potential Disadvantages
- May slightly increase the administrative burden on the government, although this is likely minimal.
- Could lead to a small decrease in revenue for the government, which may need to be offset elsewhere.
- The benefits are primarily focused on future borrowers, with no direct impact on existing borrowers.
- There might be unintended consequences related to loan availability or interest rates, though these are not explicitly addressed in the bill.
- The long-term financial impact on the federal budget is uncertain and requires further analysis.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to promote education and reduce financial burdens on students. Article I, Section 8 grants Congress the power to collect taxes and duties to pay the debts and provide for the common defense and general welfare of the United States, which implicitly includes the power to regulate student loans. The bill does not appear to infringe on any specific constitutional rights or limitations.
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).