Legislation Assembly Majority Leader Louis D. Greenwald and Assembly Democrats Troy Singleton, Pamela Lampitt, Gabriela Mosquera and Arthur Barclay sponsored to allow county improvement authorities to refinance county residents’ student loan debt and make it easier for former college students to afford to stay in New Jersey was advanced Thursday by an Assembly committee.
“Student loan debt has crippled an entire generation, making it nearly impossible to start a family, buy a home or open a business,” said Greenwald (D-Camden/Burlington). “Creating an incentive for young people to settle down by offering debt relief will bring new energy into our local communities and improve the quality of our workforce.”
The bill (A-4117) would amend New Jersey’s County Improvement Authorities Law to permit county improvement authorities, entities counties may voluntarily establish to create and maintain various facilities and services for the public benefit, to establish student loan refinancing loan programs. Under the legislation, a county improvement authority would be authorized to refinance federal or private student loans at a lower interest rate in the name of a student or a parent borrower on behalf of county residents.
“Far too many young people are beginning their adult lives with a sense of hopelessness, because even if they can find a job after college, they know that paying back student loans may have to take precedence over saving for a house or investing for retirement,” said Singleton (D-Burlington). “Counties can play an instrumental role in helping former students get out of debt while also mitigating the state’s brain drain by encouraging more college graduates to stay in New Jersey.”
“Instead of feeling a sense of pride in their academic achievements, some recent graduates are left with a sense of buyer’s remorse, wondering if they would have been better off not going to college at all,” said Lampitt (D-Camden/Burlington). “Our state’s ability to thrive depends on making it clear that post-secondary education is a wise investment and that paying back debt doesn’t have to mean pushing back starting your life.”
“For students who can’t turn to mom and dad for help with paying for college, the options often are either forgo going to college altogether or commit to decades of overbearing indebtedness. Students in New Jersey need an alternative,” said Mosquera (D-Camden/Gloucester). “Counties that elect to refinance student loans can help reduce the burden on former college students and retain talent in our state.”
“Managing student loan debt is overwhelming for a lot of young people in New Jersey. They work hard to get into college, work hard to succeed in college, and then after doing everything right, they’re left with a mountain of debt that they struggle to pay back each month,” said Barclay (D-Camden/Gloucester). “Student loans can provide a pathway to higher education, but that pathway shouldn’t then lead to financial peril. Allowing counties to provide their residents with student loan debt relief is just the right thing to do.”
The terms and conditions of the student loan refinancing loan would include, at minimum, a confession of judgment clause, which would permit a defaulted loan to be subject to wage garnishment, and at least two types of repayment plans, one of which would provide a percentage-of-discretionary income repayment plan.
Legislation in Maryland to allow counties to refinance college loans for local borrowers was signed into law last year, allowing Montgomery County to be the first county in that state to create its own refinancing program.
The sponsors noted that the class of 2015 graduated as the most in-debt in history, with the average New Jersey student graduating with $32,700 in student loan debt alone, while the national average was $28,000. They also noted that millennials are leaving New Jersey at an extremely high rate, looking for more affordable places to live and work.
The measure was advanced by the Assembly Higher Education Committee.