Bill: Forgive Loans If Student Dies or Becomes Permanently Disabled

NJ Spotlight News | September 8, 2016 | Education, Politics
An Assembly committee moved a bill forward that would forgive debt if a student dies or becomes permanently disabled.

By Andrew Schmertz

The Assembly Committee on Higher Education made quick work of correcting what lawmakers say is an embarrassment of New Jersey’s student loan program.

“We had a tragedy where a student was murdered — a New Jersey resident was murdered — and the state filed a lawsuit against the family for the student loan,” said Assemblyman Andrew Zwicker.

The student was Kevin DeOliveira. Despite his death, the state’s Higher Education Student Assistance Agency, or HESAA, demanded his parents, who co-signed the loan, repay it in full.

So on the first day back in session after the summer, state lawmakers moved on a bill to strip the state of the power to collect in certain, rare circumstances.

“It says very simply that upon the death of a student that the loan will be forgiven,” Zwicker said.

And the bills, which moved through committee on Thursday, do more.

The debt would also be forgiven in the event of permanent disability and it would be suspended during times of temporary disability.

The state would also be barred from suspending professional licenses, such as a law license.

“Because if they are not able to work in the profession for which they trained, they’re not likely to be able to pay off their loans,” said Assemblywoman Mila Jasey.

Proponents say forgiving loans in these types of rare circumstances would have no impact on the cost of future loans or raise interest rates on borrowers.

The governor’s office said it won’t comment on the bill until it gets to his desk.

Meantime, lawmakers hope this is a start of a conversation on addressing the cost of higher education in the state.

“I think now this Higher Education Committee is going to take a longer look at how we help families get to college, stay in college, pay for college,” said Assemblywoman Patricia Egan Jones.

A report published last week by liberal think tank New Jersey Policy Perspective said, “New Jersey has seen one of the largest decreases in funding per pupil when compared to other states in the northeast… The state also falls well above average for student loan debt.”

According to the report, the state provides an average of $7,100 in aid to each student — just half of the amount the top state in the nation provides.

We reached out to the state agency, HESAA, and they say they won’t comment on pending legislation.

Committee members hope that this is the year that the state Legislature takes up the issue of student debt and the cost of higher education in New Jersey. As for this bill, it now heads to the full Assembly.