On Thursday, June 8th, the New Jersey Assembly unanimously approved two bills intended to curb student debt and make student loans more affordable. The two legislative pieces are part of a recent effort by state lawmakers to reform New Jersey’s student loan program.
The first bill, A4238, would require the state’s loan agency, the Higher Education Student Assistance Authority (HESAA), to release yearly reports to both the legislature and governor that compare state and federal loan options. The aim is to increase transparency and raise awareness of loan repayment requirements, a problem stressed by many politicians according to a study by LendEDU.
The second bill, A4239, aims to make student loan borrowers exhaust federal student loans to prevent over-borrowing. Presumably, students could save more money by taking advantage of the various grants, programs, and repayment options offered by the federal government before turning to private lenders.
Both bills have already passed the New Jersey state State and will now go to the desk of Governor Chris Christie for final approval.
“It has become the norm for families and students to take on an overwhelming amount of debt to pursue educational goals,” said Assembly co-sponsor Shavonda Sumter (D-Passaic). “This legislation package will reassess how we distribute state loans and inform families of their options when planning for college.”
Last year, a report published by the New York Times shed light on the strict rules and high interest rates tied to the New Jersey student loan program that could burden the family of a deceased borrower.
Senator Bob Gordon (D-Bergen), one of the co-sponsors in the state Senate, said the following, “These are significant bills to 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. These borrowers need a reasonable repayment agreement so that they are not destined for bankruptcy or a lifetime of insurmountable debt.”
The HESAA is by far the largest state-based student loan program in the country. In total, New Jersey’s student loans currently run near $1.9 billion. The loans feature stringent rules such as repayments that are not allowed to be adjusted according to income, while unemployed or financially-struggling borrowers are given few breaks.
In the entire United States, New Jersey has the highest-number of graduating high school students who leave the state to attend college. State lawmakers are focusing their attention on ways to keep students in the state.
In addition to the aforementioned bills, the state Senate also passed two other reform bills. The first would require a court order before using certain collection practices on defaulted loans. The second legislative piece would establish an income-driven repayment option for borrowers. Both bills have been referred to the Assembly for consideration and are expected to pass when voted upon in the lower house.
Author: Mike Brown
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