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HESAA Reform Bills Clear Full Senate


TRENTON – A four-bill package sponsored by Senators Sandra B. Cunningham and M. Teresa Ruiz to reform the state’s student loan program, and to help borrowers who are facing financial hardships as a result of the agency’s policies and collection methods cleared the full Senate today.


“This package of bills is beneficial to those who will enter the post-graduate world, but also those who are currently facing financial struggles as a result of the agency’s policies,” said Senator Cunningham (D-Hudson). “These bills are designed to make needed reforms to HESAA’s loan program so that future graduates will not endure the financial hardships that many are currently facing and will have a lasting impact on the strength of our great state and our economy.”


“These bills will change the loan collection process and help students who go to college have a manageable payment plan in the years after they graduate,” said Senator Ruiz (D-Essex). “The goals of the legislation are also to increase transparency so that students and families have more information on the financial hurdles and challenges they may face, while at the same time ensuring that if a borrower gets behind with their loan payments there is due process.”


S-765 (Cunningham/Kean, T/Ruiz) – Requires Higher Education Student Assistance Authority to obtain a court order prior to using certain collection practices for defaulted loans under New Jersey College Loans to Assist State Students (NJCLASS) Loan Program. Under current law, HESAA may pursue without a court order. Under current law, the Higher Education Student Assistance Authority (HESAA) may pursue, without a court order, a variety of means to collect on a defaulted student loan made pursuant to the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program.


S-777 (Cunningham/Ruiz) – Establishes the Higher Education Student Assistance Authority (HESAA) Task Force.  This 13-member task force would study and evaluate HESAA’s implementation of the New Jersey College Loans to Assist State Students (NJCLASS) program.


S-1148 (Cunningham/Brown) – Directs the Higher Education Student Assistance Authority (HESAA) to establish a repayment assistance program under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program for borrowers who experience a material loss of income during the period of loan repayment. The bill gives additional focus to borrowers who filed a bankruptcy proceeding.  HESAA would be required to notify the borrower of the repayment assistance program.


S-1149 (Cunningham/Brown) – Establishes the Office of the Student Loan Ombudsman within the Department of Banking and Insurance, and provides for the regulation of student loan servicers by the Department. Under the bill, the ombudsman would be appointed by the Governor with the advice and consent of the Senate and would serve at the pleasure of the Governor during the Governor’s term of office.  The ombudsman would have a variety of duties relating to the assistance of student loan borrowers with complaints and concerns regarding their loans and would be required to make recommendations to the legislature and other interested parties regarding problems faced by student loan borrowers.


In August 2016, the Senate Legislative Oversight Committee and the Higher Education Committee held a hearing on the issue of student loans made by HESAA after The New York Times published an investigative report in conjunction with ProPublica detailing an agency with onerous loan terms that have 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.


S-765 cleared the Senate today 37-0; S-777 cleared the full Senate with a vote of 39-0; S-1148 was approved by a vote of 39-0 and S-1149 was approved by a vote of 37-1. They will now head to the Assembly for further consideration.