Beach-Sarlo-Ruiz Bill Would Require Student Loan Forgiveness In Certain Events Now Law

TRENTON – Legislation sponsored by Senators James Beach, Paul Sarlo and M. Teresa Ruiz directing the State Higher Education Student Assistance Authority to forgive student loans in certain events, including, the borrower’s death was signed into law today.

The law, S-743, comes after The New York Times published an investigative report in conjunction with ProPublica detailing an agency with onerous loan terms that has employed aggressive tactics in the event borrowers were not able to make payments. The Times article profiled a mother who, despite her son’s killing, was informed by HESAA that she was not eligible for loan forgiveness. A ProPublica article appearing in NJ Spotlight subsequently stated that internal emails from the agency show that staffers at the authority were instructed not to tell families that they may qualify for loan assistance unless they explicitly asked.

In August, the Senate Legislative Oversight Committee held a hearing on the issue. The committee heard from parents and other advocates about the struggle of paying student loans and the agencies aggressive tactics. Some speakers described how paying student loans sent them into bankruptcy. Representatives from HESAA did not attend the August hearing.

“A parent’s worst nightmare is losing a child, and if that unfortunate event should occur, the last thing a parent should have to face is someone calling to collect money for student loans,” said Senator Beach (D-Burlington and Camden). “This law will put an end to that practice and help establish new policies to put in place.”

“How anyone could ask a mother – who just lost her son – to pay for his student loans is incomprehensible,” said Senator Sarlo (D-Bergen and Passaic) chairman of the Senate Budget and Appropriations Committee. “Student loan payments should stop at death, and with this law in place, they will.”

“We can only imagine the devastation and heartache that families experienced in losing their loved one so tragically, not to mention the added pain of having to deal with a debt collector,” said Senator Ruiz (D-Essex). “Particularly for a state entity that is providing education resources to its residents, there should be better policies in place. This law will relieve parents of the financial burden of the loans, saving them the agony of dealing with collectors or worse in the case of such a loss.”

The law provides that in the event of the student borrower’s death or total and permanent disability, HESAA must fully discharge the obligation of the student borrower and a parent or guardian who cosigned the loan.  In the case of the death of a student borrower, the executor or administrator of the student’s estate must provide HESAA with a certified copy of the student’s death certificate within 120 days of the death.  In the case of a student borrower who becomes totally and permanently disabled, the student must provide HESAA with a written statement from a licensed physician certifying that the student borrower is totally and permanently disabled.

The law also requires HESAA to grant a deferment of payment of loan principal and interest in the event that a student borrower becomes temporarily totally disabled.  The deferment will begin on the date that the student borrower’s temporary total disability is certified to begin and will end on the date that the temporary total disability is certified to end.  Written certification of the temporary total disability will be provided by a licensed physician.  Interest on the loan will not accrue during the period of deferment.

Furthermore, it would provide that, in the event of an NJCLASS student borrower’s death, HESAA would fully discharge the obligation of the student borrower and a parent and or guardian who cosigned the loan.  Under the bill, the executor or administrator of the student borrower’s estate would provide written notification to the authority of the student borrower’s death and would provide the authority with a certified copy of the death certificate within 120 days of the student borrower’s death.

NJCLASS Loans are awarded by HESAA and may be used by undergraduate and graduate students to pay for school-related expenses including tuition and fees, books, supplies, and room and board without any cap to the amount that can be borrowed.  Under the program, if a borrower dies while the loan is still in repayment, a person who co-signed the loan (such as a parent) will assume responsibility for the debt’s repayment.  Student loans obtained through the federal government are generally discharged in the event of the borrower’s death.

S-743 cleared the full Senate 34-0 and cleared the Assembly 66-0-7.

The law will take effect immediately.

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