New Jersey: End of Debt Nightmare in Sight for Students Who've Defaulted on Loans

"A Senate committee has taken another step to help those wrestling with student-loan debt, this time finally voting to require loan modification and consolidation for those who have defaulted on New Jersey college loans," NJ Spotlight reports.

"Sen. Sandra B. Cunningham (D-Hudson), chair of the Senate Higher Education Committee, said S-2056 is the last reform in a multi-bill package introduced following a charged hearing 18 months ago. At that time, numerous former students and family members criticized the New Jersey Higher Education Student Assistance Authority for its practices, which one senator called 'predatory.'

'It was amazing to sit in a hearing and hear 24- and 25-year olds sit and tell you that they felt their life was over because they felt they would be in debt for the rest of their lives for trying to get a decent college education,' said Cunningham, prime sponsor of the bill. 'We decided we had to do something about it … This is the last piece.'

One of the mothers, Deborah C. Gumpper, was at both that August 2016 hearing and the one on Tuesday when the committee voted 5-0 to approve the requirement that HESAA offer loan modifications and consolidations for those in default. She said legislation is her last hope for a resolution to her family's longstanding battle to get rid of her son's loan debt. HESAA judged his NJCLASS (New Jersey College Loans to Assist State Students) loan in default after 18 months of his paying some, but not all, of the monthly payments due to his inability to find a job and then getting one with low pay. She said the lawyer that the authority gave his defaulted loan to charged a $22,000 collection fee. Her son filed for bankruptcy.

'You have passed several bills that have helped borrowers, but none that have helped the defaulted borrower,' Gumpper said. 'This is our last chance to get these loans back into repayment.'

The bill would require HESAA to offer consolidated loans with a fixed-interest rate to all borrowers currently in default on two or more NJCLASS loans, including those on which the authority or a collection attorney has obtained a judgment lien against a borrower.

'It's our last ray of hope,' said Tracey Timony, whose daughter and nephew both defaulted. 'We have to get our finances in shape and give them a future. We need to move this bill forward so we can get out of bankruptcy … We just need a chance to make it right. We want to pay our debt.'"

NASFAA's "Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

 

Publication Date: 5/17/2018

View Desktop Version