Student Loan Reform Advances in NJ

Sandra Cunningham, a lead sponsor of a group of State Senate bills that would reform New Jersey's student loan authority.

Sandra Cunningham, a lead sponsor of a group of State Senate bills that would reform New Jersey’s student loan authority. PolitickerNJ

TRENTON — Student loan reform could be coming to New Jersey. A suite of bills aiming to make the state’s lending practices more transparent and its collection practices less aggressive advanced in a State Senate committee Thursday, and could change what many see as exceptionally punitive collection practices.

The Higher Education Student Assistance Authority has come under scrutiny following a ProPublica investigation that outlined the gravity of the state’s policies for borrowers: parental cosigners are made to pay off the balance even in the event of the student’s death or permanent disability, and the state is currently free to take extraordinary steps like garnishing wages or revoking professional licenses without court approval.

The bills voted on today would would reign in the state’s collection practices by requiring court approval in many cases, introducing a sliding scale for repayment of loans based on income, mandating that the state provide information on its collection practices to prospective borrowers, and introducing a debt ceiling of $200,000 for all students taking out loans from the state.

Senator Sandra Cunningham, who sponsored the bills, called them a reasonable step toward ensuring that more families will not have to suffer from onerous debt in cases where a student has died, and that students aren’t shackled to insurmountable balances upon graduation.

“These bills are designed to make needed reforms to HESAA’s loam program so that future graduates will not endure the financial hardships that many are currently facing,” Cunningham wrote in a statement. “They also will provide some assistance to those who are already dealing with challenges as a result of the agencies policies.

“We need to repair the state’s loan program so that it provides opportunity for students to attend college, and does not set them up for failure upon graduation.”

“The legislation will help establish guidelines for families, but also boundaries so that HESAA is not issuing loans that are in excess of what a borrower can manage over the long-term,” fellow sponsor Senator Gordon wrote. “They also address the need for reasonable repayment agreements so that students and families are not destined for bankruptcy or a lifetime of insurmountable debt.

“This package of bills is aimed at reforming the process, and helping students who go to college have a manageable payment plan in the years after they graduate.”

The bills join proposals from Assemblyman Andrew Zwicker and Mila Jasey, which would allow for deferment in cases of death or disability and end the practice of revoking professional licenses in cases of default.

Student Loan Reform Advances in NJ