TRENTON – A proposal that would forgive co-signers from paying off student loans in the event of the borrower’s death cleared an Assembly committee Thursday.
For certain loans, the bill would direct the Higher Education Student Assistance Authority to “fully discharge the obligation” of a co-signer, often a parent, from having to repay the loan.
Opponents are concerned that if this bill becomes law, lenders may increase the overall cost of loans and bondholders will absorb potentially expensive losses. The number of borrowers potentially affected by this proposal is unknown, and there already may be other remedies in existence, such as life insurance policies.
The 6-4 vote in the Higher Education Committee fell along party lines with Democrats Pamela Lampitt (D-Cherry Hill), Joan Voss (D-Fort Lee), Angel Fuentes (D-Camden), Connie Wagner (D-Paramus), Cleopatra Tucker (D-Newark), and Thomas Giblin (D-Montclair) approving it, while Republicans Charlotte Vandervalk (R-Westwood), Sam Thompson (R-Old Bridge), Pat Delany (R-Lumberton), and John DiMaio (R-Hackettstown) opposing it.
“Why should we take this kind of category and give it special dispensation,” Thompson asked.
Lampitt drew a distinction between this and other types of loans that have to be repaid by a co-signer.
“A child’s death is devastating enough,” she said, without the parents having to deal with a monthly reminder in the mail.
She said that primary sponsor Peter Barnes (D-18) of Edison would be willing to consider amendments.
The bill was referred to the Assembly Appropriations Committee for additional review.
