The New Jersey Senate has advanced bills sponsored by Senate Republican Leader Tom Kean and Senator Robert Singer requiring HESAA to cease aggressive collection practices and establish programs that will enable borrowers to afford to pay back their student loans.
Senator Kean’s bill, S-2510, requires the Higher Education Student Assistance Authority (HESAA) to obtain a court order prior to using certain collection practices for defaulted loans under the NJCLASS Loan Program.
“I have heard from far too many hardworking college graduates who fell victim to aggressive loan collection practices,” Senator Kean said. “We don’t want to discourage more students from applying to college. HESAA should not be able to engage in drastic measures, such as garnishing wages or revoking professional licenses, without some measure of accountability. Requiring HESAA to get a court order before taking these actions is the right and fair thing to do. ”
Aggressive loan collectors are hurting hardworking grads. My bill requires court order before taking drastic action https://t.co/BN7QMVYklO
— Senator Tom Kean (@tomkean) October 20, 2016
Repaying a student loan should be affordable. We have to end cycle of fear that discourages ppl from going 2 college https://t.co/p35Vix2ZhM
— Senator Bob Singer (@bobsingernj) October 20, 2016
Senator Singer’s bill, S-2573, directs HESAA to establish an income-driven loan repayment option. Monthly payments would be limited to no more than 15 percent of discretionary income. Borrowers who live below 150 percent of the federal poverty guideline would have $0 monthly payments.
“Paying off a student loan should be something that every college graduate can afford to do,” Senator Singer (R-Monmouth, Ocean) said. “The income-based repayment option established under this legislation will enable students to actually achieve this goal, instead of being forced to spend the rest of their lives trying to pay down a massive amount of debt.”
“If a borrower falls behind on their student loan payments, they should have the opportunity to work with HESAA to rehab those loans, so a bad credit report doesn’t eliminate any chance they had for becoming financially secure,” Senator Singer added. “By instituting these protections, we can end the cycle of fear that is discouraging our young people from applying to college.”
S-2573 also requires HESAA to establish a program for the purpose of rehabilitating a defaulted NJCLASS loan. Under the bill, HESAA would be required to notify national credit bureaus that the loan is no longer in default status within 30 days of the borrower’s successful completion of the loan rehabilitation program.