Bill Would Impose New Regulations to Better Protect Families Planning for College from Taking on Unmanageable Student Loan Debt
Legislation Assembly Democrats Shavonda Sumter, Mila Jasey, Daniel Benson, Elizabeth Maher Muoio, Joann Downey and Raj Mukherji sponsored to combat student loan debt in New Jersey gained final legislative approval Monday in the Senate.
The bill (A-4239) would revise the New Jersey College Loans to Assist State Students (NJCLASS) program to conduct income verification, limit total student loan amounts and require that applicants first exhaust federal student loans.
“The only concern a college student should have after graduating is choosing which job will lead them closer to their goals,” said Sumter (D-Bergen/Passaic). “It has become the norm for families and students to take on an overwhelming amount of debt to pursue educational goals. This legislation will reassess how we distribute state loans.”
“Furthering your education is necessary to advance a career,” Jasey (D-Essex/Morris), chair of the Assembly Higher Education Committee. “It should never be a burden to do so, and it should be encouraged without fear of debt. This is the first step toward helping families struggling to send their children to college without saddling them with cumbersome loan debt.”
“College loan debt should not follow you throughout your adult life,” said Benson (D-Mercer/Middlesex). “It’s time to end this cycle of loading students up with debt that too often takes a lifetime to pay back.”
“The college experience should be one focused on learning, not overshadowed by mounting loans students must pay back upon graduation,” said Muoio (D-Mercer/Hunterdon). “This is the first step to helping families avoid burdening themselves with debt.”
“We want students to graduate and be able to shoot for their dreams without being hampered by years of loan repayments that hinder their productivity,” said Downey (D-Monmouth). “These changes will make the state’s higher education authority a stronger advocate for our students.”
“Student loan debt is preventing too many New Jersey residents from moving forward in life,” said Mukherji (D-Hudson). “Reforming the NJCLASS program will help prevent future generations from facing similar financial challenges.”
The bill would make three changes to the NJCLASS program:
1) Require that the Higher Education Student Assistance Authority (HESAA) verify the financial information reported by a borrower or cosigner on an NJCLASS loan application;
2) Mandate that HESAA deduct the maximum amount of federal direct subsidized loans available to the student from the available NJCLASS loan amount when establishing the maximum annual loan amount for a student borrower. If the available interest rate for federal direct unsubsidized loans is lower than the interest rate available to the student under the NJCLASS loan program, the authority must deduct the maximum amount for federal direct unsubsidized loans available to the student from the NJCLASS loan amount; and
3) Provide that a student borrower’s total loans under NJCLASS may not exceed $150,000.
The measure, which received unanimous approval from both houses of the legislature, now heads to the governor’s desk.