With the state of New Jersey facing major disruptions to everyday operations as a result of the current COVID-19 pandemic, Assemblyman Bill Moen has proposed a bill that would freeze interest accrual on all New Jersey student loans in deferment or forbearance during this public health crisis.
In the week following Governor Murphy’s executive order closing many non-essential businesses and instructing residents to stay at home, more than 150,000 residents applied for unemployment. Even employees whose businesses remained open may still be out of a job because of personnel cuts resulting from the stock market plunge or necessary efforts to curb the spread of COVID-19.
Under the proposed bill, the Higher Education Student Assistance Authority (HESAA) would suspend the accrual of interest for 60 days on the New Jersey College Loans of borrowers who have been approved for a loan deferment or forbearance.
“Countless residents throughout our state are out of work right now because of the coronavirus, and many of them are anxiously wondering how they will pay their bills,” said Assemblyman Moen (D-Camden, Gloucester). “With a need to focus on essentials such as groceries, no one should have to worry about their student loan debt during a time like this.”
Both forbearance and deferment help borrowers avoid defaulting on their loans by allowing them to temporarily pause their monthly payments. Depending on the borrower’s situation, they may be eligible to delay payment of both the interest and principle amounts. However, neither option prevents interest from continuing to accrue, which is why this bill aims to ensure borrowers are not indirectly penalized for the atypical and dire circumstances preventing them from making payments.
“This crisis is unlike any our state has faced in recent history. Institutions need to recognize these extraordinary circumstances and make exceptions for the people who have been impacted by the pandemic,” Assemblyman Moen said. “No borrower should have to sink further into debt because they were unable to pay principal or interest on their college loans right now. This is one way we can help ease the financial burden on our residents as we all work together to make it through this.”
Last year, over one million New Jersey residents owed a total of $37.6 billion in student loan debt. As the youngest member of the Assembly with many of his peers still paying off their college loans, Assemblyman Moen has made the student debt crisis one of his main focuses since entering office in January.