TRENTON – Legislation sponsored by Senator Sandra Bolden Cunningham, Senator Jim Beach, and Senator Nellie Pou to help student loan borrowers, including those who are facing financial hardships, was approved by the full Senate today. The legislation would also create more oversite and accountability for student loans.
As of 2017, it is estimated thatAmericans owe over $1.45 trillion in student loan debt, spread out among about 44 million borrowers. Student loan debt is about $620 billion more than the total U.S. credit card debt, according to the website, Student Loan Hero.
“Student debt is growing out of control and if we do not come up with options and strategies to help graduates manage their loans, this debt will follow these graduates well into adulthood,” said Senator Cunningham (D-Hudson). “There is a growing need for repayment plan options, including income-driven options, and for additional assistance for borrowers who are having difficulty repaying their loans but feel they have nowhere to turn for help.”
“We need to make sure that borrowers are aware of their rights and responsibilities prior to taking out student loans and ensure that they won’t be exploited by student loan servicers,” said Senator Beach. “This legislation is about working with borrowers and not against them in order to establish a more fair system to suit them long after they have graduated.”
“Too many families are unable to pay their student loans and are facing financial ruin as a result,” said Senator Pou (D-Passaic/Bergen). “We need to take effective steps to solve this problem and ensuring that we have options for borrowers to have loan payments adjusted because of a loss of income, is an important part of that process.”
The bills that cleared the Senate today are:
- S-3198 (Cunningham/Beach) – 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. 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. The bill was approved by the Senate with a vote of 28-2.
- S-3218 (Cunningham/Pou) – Direct 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 on borrowers who filed bankruptcy proceeding. HESAA would be required to notify the borrower of the repayment assistance program if a proof of claim is filed. The bill was approved by the Senate with a vote of 32-0.
In August of 2016, the Senate Legislative Oversight Committee chaired by Senator Gordon and the Senate Higher Education Committee led by Senator Cunningham heard from student borrowers and families about their financial hardships and the Higher Education Student Assistance Authority’s aggressive collection tactics and strict conditions that some said had ruined them financially. Since that time, several pieces of legislation have been put in place to help borrowers and families and to reform HESAA’s policies.