Legislation Approved by Assembly Would Establish Default and Rehabilitation Processes
To help student loan borrowers pay off their debts without severely damaging their credit history, Assembly Democrats Ralph Caputo, Mila Jasey and Gary Schaer released the following statements on their bill (A-4623) to establish a process for the Higher Education Student Assistance Authority to declare a loan under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program as in default or rehabilitated. The measure received final legislative approval on Monday, passing the Assembly 76-0-0. The bill now heads to the Governor’s desk.
Assemblyman Caputo (D-Essex): “The average student in New Jersey graduates college with over $30,000 in debt. It can take years for graduates to fully pay off their debt, which can haunt them for years as they try to navigate the expenses of adulthood. NJCLASS borrowers currently lack a path to loan rehabilitation if they struggle to make payments; this bill will correct that problem and set up a system for them to make manageable on-time payments and reduce their debt.”
Assemblywoman Jasey (D-Essex, Morris): “It’s all too common for students to leave college with crushing debt and earn a low-paying salary at an entry-level job. It’s quite easy to fall behind on payments in this situation, oftentimes resulting in a loan declared in default, which can negatively impact a graduate’s credit for many years. It’s imperative that we create a process for NJCLASS borrowers to have a default loan rehabilitated so they can focus on building their lives and careers instead of overwhelming debt.”
Assemblyman Gary Schaer (D-Bergen, Passaic): “College graduates are facing the largest debt burden in history and as a State it is our responsibility to ensure that they are set up for success. Students who default on their loans are often caught in a cycle of poor credit history and unemployment. This bill creates a process for borrowers to restore their loans from a default status by allowing them to make payments over several months to HESAA. Removing the default status will give graduates a second chance and an opportunity to build a better future for themselves and their families.”