S. 3538 — Student Loan Tax Elimination Act

This section repeals the authority to charge origination fees on Federal Direct Loans (i.e., Stafford, PLUS, Consolidation, and Unsubsidized Stafford Loans) under part D of title IV of the Higher Education Act of 1965. The repeal applies to loans for which the first disbursement of principal is made on or after July 1 following the date of enactment (or, for Federal Direct Consolidation Loans, the application is received on or after such date). (Thus, borrowers receive the full approved loan amount without upfront fee deductions, which previously ranged from approximately 1% to 4% depending on loan type.)