March 15 (UPI) — The Biden administration on Friday said it will take new steps to crack down on so-called “junk” fees in higher education that can cost students billions but often have little explanation.
The hidden costs or surprise fees impacting students can appear as “loan originator” fees, which cost some seven million borrowers more than $1 billion annually, and other mysterious credit card charges without an option to avoid the fees, The White House said in a statement.
“Each year, students — including federal student loan borrowers — incur billions in fees or additional unseen costs for unused meal account funds, using college-sponsored credit card or banking account, paying for textbooks or simply taking out a loan to pay for school,” the White House said.
The White House said students may face these fees multiple times throughout their higher education experience.
The new White House action seeks to eliminate student loan origination fees, end college banking junk fees, eliminate automatic charges for textbooks, stop the practice of colleges financially benefiting from leftover meal plan fees along with increasing cost transparency.
The new rules, which will take effect July 1, will also prevent schools from withholding student transcripts unless his or her accounts are paid, a common practice for institutions to pressure students outstanding debts.
It would also place limits on late fees, debt collections and other punitive actions for outstanding accounts.
Last week, Biden announced a task force that would tackle junk fees that cost Americans $20 billion each year in what the White House called “unfair and illegal” pricing by corporations.
Last October, the Biden administration employed the Federal Trade Administration to use new measures to eliminate junk fees across the U.S. economy.
