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NJ Pols Slam Student Loan Agency for Oppressive Tactics

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New Jersey State Senator Sandra Cunningham is working to make life easier for those who have taken out student loans.

A group of people who endured great difficulties with New Jersey’s controversial student loan program recently described to state legislators its aggressive collection tactics and oppressive terms that some said had ruined them financially.

“Hesaa destroyed my family,” Tracey Timony, speaking of the state’s Higher Education Student Assistance Authority, exclaimed at a hearing before the Higher Education and Legislative Oversight Committees of the New Jersey State Senate.

As reported by the New York Times, Ms. Timony had co-signed on her daughter’s student loans totaling $140,000. But when her daughter defaulted, the mother was sued by one of the agency’s collection firms and had no choice but to declare bankruptcy to arrange more manageable monthly payments.

Hesaa operates the largest state-based student loan program in the U.S., with nearly $2 billion in outstanding loans.

Hesaa charges higher interest rates than similar federal programs, and has dramatically expansive collection powers. If borrowers have trouble making payments, the agency can garnish their wages, seize tax refunds and revoke professional licenses, all without obtaining a court judgment.

State legislators expressed their distaste for the agency’s tactics.

An investigation has revealed that repayment of the state loans cannot be adjusted based on the borrower’s income, and borrowers — together with their co-signers — are given very little breaks, even when facing disability or death.

A college graduate who defaulted on his loans after he was diagnosed with cancer and lost his job was sued by the agency for more than $250,000. A mother who co-signed on her son’s loans is still required to pay off his debt, even after he was murdered.

Several speakers at the hearing called for a rehabilitation program to help bring defaulted loans current. “The design of any responsible student loan program must address the needs of the most vulnerable borrowers,” contended David McMillin, a lawyer with a nonprofit organization that provides free legal assistance to low-income New Jersey residents.

Over the past five years, the agency has sued a growing number of borrowers. In 2010, it filed less than 100 lawsuits against borrowers and their co-signers; in 2015, the number of lawsuits rose to over 1,600.

Following the hearing, the Higher Education Committee passed a measure that would forgive the loans of borrowers who have died, sending the bill to the Budget and Appropriations Committee for more consideration.

Under the proposed law’s terms, parents or guardians who co-sign loans for their children would be exempt of responsibility for the loans if their children die. After the death of a borrower, a parent or guardian would have 120 days to provide the agency with a death certificate to get the loan forgiven.

Legislators also proposed a measure that would require Hesaa to get a court order before seizing wages, taking back tax refunds or suspending professional licenses of delinquent borrowers.

“It will help the agency not just automatically destroy lives,” declared State Senator Sandra B. Cunningham, a Democrat from Jersey City, who is the chairwoman of the Higher Education Committee.

Gary Parker

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