Legislatures in New Jersey are doing more to help student loan debtors than the Department of Education is. Recently they have passed two laws that will assist New Jersey residents with student loan troubles.
The first bill creates the Office of the Student Loan Ombudsman within the Department of Banking and Insurance (DOBI) and regulates student loan servicers.
Under the bill, the ombudsman will, at a minimum:
(1) receive, review, and attempt to resolve any complaints from student loan borrowers;
(2) compile and analyze data on student loan borrower complaints;
(3) assist student loan borrowers to understand their rights and responsibilities;
(4) provide information and make recommendations to the public, agencies, legislators, and others regarding the problems and concerns of student loan borrowers;
(5) analyze and monitor the development and implementation of federal, State, and local laws, regulations, and policies relating to student loan borrowers;
(6) review the complete student education loan history for any student loan borrower who has provided written consent for review; and
(7) disseminate information concerning the availability of the Student Loan Ombudsman to assist student loan borrowers and potential student loan borrowers. – Source
The second bill requires Higher Education Student Assistance Authority to establish repayment assistance program for borrowers under New Jersey College Loans to Assist State Students Loan Program who suffer material loss of income.
But according to the new law headed for approval by the Governor, new options will exist to help student loan debtors. Specifically:
The Higher Education Student Assistance Authority shall establish a repayment assistance program under the NJCLASS Loan Program for borrowers who experience a material loss of income during the period of loan repayment. Under the repayment assistance program, a borrower’s payment shall be limited to 10 percent of disposable income over 150 percent of the federal poverty level.
A borrower shall be eligible to participate in the repayment assistance program for a period of two years. During the period of participation in the repayment assistance program, the authority shall pay the interest on the NJCLASS loan and the payments made by the borrower shall be applied to the reduction of the principal balance of the loan. At the end of the borrower’s participation in the repayment assistance program, the regular monthly repayment amount shall be recalculated based on the remaining principal balance of the loan.
In the event that the authority files a proof of claim against a borrower in a bankruptcy proceeding, the authority shall notify the borrower of the repayment assistance program.
A borrower under the NJCLASS Loan Program who has been adjudicated a bankrupt prior to or following the effective date of this act shall be eligible to participate in the repayment assistance program. – Source
To the credit of New Jersey, the bill passed 31-0.