Trenton – Legislation to protect private student loan borrowers, sponsored by Senate Higher Education Chair Senator Sandra B. Cunningham, cleared the Senate Higher Education Committee today.
“Regulation and oversight of private student loan lenders is long overdue,” said Senator Cunningham (D-Hudson). “Many people who are struggling financially may be enticed by the low interest rates offered by private lenders, not realizing they do not offer the same protections as federal loans. This legislation will ensure those who refinance, or those who may choose to go back to school after this public health crisis, are fully protected.”
The bill, S-2358, would require the registration of private education lenders and establish protections for student borrowers with private loans. Currently, New Jersey borrowers owe an estimated $9 billion in outstanding student loan debt.
The bill would set new standards for the servicing of cosigned private student loans. It would require more robust disclosures, ensure cosigner release is accessible to all borrowers and require cosigners have access to all documents related to the loan, among other things. New Jersey currently has over 130,000 older borrowers, these borrowers are often co-signers helping their children or other relatives attend school.
The legislation would also require disability discharge options for all private student loans in the state.
The bill also includes additional protections to expose predatory lenders and allow borrowers to hold them accountable.
The bill was released from committee by a vote of 4-0.