What is an origination fee?
A 21: Fee, payable by the borrower and deducted from the principal of a loan prior to disbursement to the borrower. For federally backed loans, the origination fee is paid to the federal government to offset the cost of the interest subsidy to borrowers. For private loan programs, the origination fee is generally paid to the originator/lender to cover the cost of administering and insuring the program.
