New Jersey Has Its Own Student Loan Rights Law for 2020

Attorney Edward Hanratty sent in the following information.

The state of New Jersey has enacted a law that protects student loan borrowers from abuse by student loan lenders. NJHESAA/NJCLASS, are you listening?

It requires that student loan lenders, other than the federal government and big banks, be licensed and regulated by the state of New Jersey.

It requires lenders to keep records for two years of all student loan transactions, acknowledge receipt of borrower inquiries and respond within 30 days (no more email into a black hole), ask the borrower what to do with extra money the lender has that the borrower paid in (like any overpayment of a monthly payment on a student loan), the lender has to apply any partial payment in a way that minimizes late fees and interest to the borrower, a new servicer has to honor all of the prior servicer commitments (no more “we don’t have that program” when you student loan servicer changes), and if a student loan borrower doesn’t make their loan payment the lender must automatically review the student loan borrower an income based student loan repayment plan.

So what does the law specifically prevent New Jersey student loan lenders from doing? Lots of things, but the most common problems with student loans in New Jersey that the law mentions are:

  • tricking student loan borrowers, which includes engaging in any unfair or deceptive practice, or misrepresenting or omitting any material information in connection with the servicing of a student education loan, such as misrepresenting the amount, nature or terms of any fee or payment due, the terms and conditions of the loan agreement or the borrower’s obligations under the loan, which is a long way of saying the lender or servicer has told the borrower something that did not turn out to be true about the student loan;
  • obtaining property by fraud or misrepresentation, like telling a student loan borrower to make an extra payment to avoid default, but then defaulting them anyway; misapplying loan payments;
  • harming a student loan borrower’s creditworthiness by providing inaccurate information to a credit reporting agency or failing to report to a national CRA at least annually both a borrower’s favorable and unfavorable payment history refusing to communicate with an individual authorized in writing by the borrower to be his/her representative, like if you are overseas and your parents or spouse need to talk to the student loan servicer.
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    If your student loan lender or servicer does any of these things, and you are the borrower or a cosignor on a student loan in New Jersey, you now have the right to sue the student loan company to get your money back and get your credit straightened out.

    This law is important because, before this, student loan lenders in New Jersey would defend their bad acts by saying there was no law that prevented them from misbehaving, now there is.

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