Senate Committee Passes Kean & Singer Bills to Protect Students with NJCLASS College Loans Overseen by HESAA
The Senate Higher Education Committee has advanced two Senate Republican bills to protect students with NJ CLASS loans overseen by the Higher Education Student Assistance Authority (HESAA.)
Senator Robert Singer’s bill would require HESAA to establish a new income-based repayment option and a loan rehabilitation program for NJ CLASS borrowers. Senate Republican Leader Tom Kean’s bill would require HESAA to obtain a court order prior to using certain collection practices for defaulted loans.
“College students should be focused on making the most of their degree by finding a career that will allow them to gain financial independence,” Senator Singer (R-Monmouth, Ocean) said. “Instead, more and more graduates are using their hard-earned dollars to climb out from under a mountain of debt. Requiring HESAA to establish a fair, income-based loan rehabilitation program will enable recent grads to save for the future and funnel the money they can afford to spend on a starting salary back into the local economy.”
Requiring HESAA to create a loan rehab program is the right and fair thing to do for our hard working college grads https://t.co/a1H7RyIwVP
— Senator Bob Singer (@bobsingernj) September 29, 2016
Senator Singer’s bill, S-2573, directs HESAA to establish an income-driven repayment option for an NJCLASS Loan Program loan. Monthly payments would be limited to no more than 10 percent of discretionary income. Borrowers who live below 150 percent of the federal poverty guideline would have $0 monthly payments.
S-2573 also requires to HESAA establish a program for the purpose of rehabilitating a defaulted NJCLASS loan and removing it from default status. 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.
Senator Kean’s bill, S-2510, requires HESAA to obtain a court order prior to using certain collection practices for defaulted loans under the NJCLASS Loan Program. Currently, HESAA can garnish wages, rescind state income tax refunds, revoke professional licenses, and confiscate lottery winnings, all without a court order.
“The NJ CLASS loan program was designed specifically to aid students who need financial assistance beyond what the federal loan program has provided,” Senator Kean (R-Union) said. “It was troubling to hear from young people and families who have lost the opportunity to advance their career or maintain financial security because of HESAA’s ability to garnish wages and engage in practices that can and have caused irreparable harm. There should be safeguards and accountability measures to protect students from overly-aggressive collection practices. Requiring HESAA to obtain court approval before taking action is a good place to start.”