Assembly Majority Leader Louis Greenwald (D-Camden/Burlington) will be introducing two new pieces of legislation on Thursday that are part of a broader legislative package designed to ease the crushing burden of student loan debt facing New Jersey residents.
“The unfortunate reality of the student loan crisis is that we’re losing a generation to educational debt,” said Greenwald (D-Camden/Burlington). “With the average graduate swimming in $32,700 in debt, a college degree is no longer a pathway out of poverty.”
The first bill, known as the “Know Before You Owe” debt letter program, would mandate that institutes of higher education provide students with updates on how much debt they have accrued after each semester, as well as an estimate of total pay-off amounts for their loans. This legislation is modeled after a successful program at Indiana University, whereby simply telling borrowers what they already owe when they take out loans each semester has encouraged them to borrow less. In less than a year, this program has lowered federal undergraduate Stafford Loan disbursements by 11 percent at the university.
“By making the loan process transparent, students will better understand the weight of the debt they are taking on and will be more inclined to look beyond just loans for financial assistance,” said Greenwald.
The second bill would provide a tax exemption to employees receiving tuition assistance and student loan assistance from their employers. With high student loan debt looming over recent graduates seeking employment, some companies are taking the initiative to provide student loan assistance programs for employees. These incentives work much like tuition assistance programs yet these programs are taxed as income and in some instances cause student loan payments to increase.
Currently, companies like Aetna, Fidelity, and Price Waterhouse Cooper already offer loan repayment benefits.
Greenwald noted that New Jersey currently has the dubious distinction of being the state with the highest out-migration of college students. The bills being introduced are part of a broader package designed to help make New Jersey a friendlier place for recent graduates to build a career.
In September, Greenwald unveiled three additional pieces of legislation:
– A-2925, which calls for high schools to provide greater guidance on educational assistance available to students and requires financial literacy courses to include information on tuition grants, scholarships, and student loans. Students would also learn about New Jersey’s dual enrollment options, which would allow students to take college level courses in high school.
– A-2926, which recently passed in the Assembly Higher Education Committee, would repeal outdated legislation which would make it impossible for some individuals to keep a job and pay their student loan debt. Currently, the state has the ability to suspend professional license such as nursing, cosmetology, and dental assisting should they default on their student loans. A-2926 would reverse this law.
– A-4117 would provide student loan refinancing options through county improvement authorities. The bill would allow counties to leverage their improvement authorities to refinance student loans for borrowers saddled with high student loan interest rates, subsequently easing their debt burden. Earlier this year, legislation in Maryland to allow counties to refinance college loans for local borrowers was signed into law, allowing Montgomery County to be the first county in the state to create their own refinancing program.
The Majority Leader noted, that cumulatively, the legislative package targets student loan debt from all angles.
“We can no longer ignore this issue,” added Greenwald. “As student debt reaches $1.3 trillion nationally, it is taking its toll on our economy and our local communities. Most of all, it affects young adults and their decision-making on whether or not to buy a home, a car, start a small business or stay in New Jersey. We cannot afford to stand by and watch as the American Dream no longer becomes attainable for this generation.”