New Jersey Citizen Action and allied advocates applaud signing of landmark student loan protection law

South Orange—New Jersey Citizen Action, student advocates and allies today applauded Lieutenant Governor Sheila Oliver signing S-1149/A-455 into law. The landmark legislation calls on the state Department of Banking and Insurance to establish strong lending standards and a licensing requirement for any student loan servicer operating in the state. The bill also gives DOBI the power to enforce standards, fine violators, designate a student-loan ombudsman, and will protect students from abusive practices by loan servicers who manage and collect student debt. Advocates hailed the new law as a critical first step in addressing New Jersey’s $44 billion student debt crisis.

“The massive and growing student debt crisis in this country doesn’t amount to dreams deferred, it amounts to dreams destroyed,” said Beverly Brown-Ruggia, Financial Justice Organizer for New Jersey Citizen Action.“Fortunately for New Jersey, we have a Legislature and an administration who understand how devastating the problem is. NJCA commends our leaders for implementing policies and legislation like the bills signed into law today that will prevent unnecessary debt, protect borrowers from abuse and will make post-secondary education as debt free as possible for everyone.”

“The signing of A455/S1149 is a resounding win for student loan borrowers across the state,” said Stephan Lally, Student Government Association President of Ramapo College of New Jersey. “This bill will regulate and provide the necessary oversight for student loan servicers in the state and creates an ombudsperson that will serve as a watchdog for students,” “These reforms are long overdue and I want to thank the New Jersey Legislature, the Governor and the Lieutenant Governor for putting our students first!”

“I’m very grateful to Governor Murphy, the legislature, New Jersey Citizen Action, and everybody else who helped make this legislation a reality,” said Navruz Baum, a student representative of Rutgers University. “Because of them, my friends, current, and former college students across the state will be better protected from student loan servicers as they build families, buy houses, and save for retirement.”

Around one million New Jersey residents carry the burden of student loan debt. One of the worst problems student borrowers have with repayment has been the reported history of abusive practices by the loan servicers that manage and collect the loan debt. Often servicers consistently fail to put borrowers into income-based repayment plans for which they qualify, misapply payments, report incorrect information to credit bureaus, and place borrowers in forbearance, or plans that cause their debt to balloon. This can lead to delinquencies and default, starting many borrowers down a road of damaged credit and missed economic opportunities.

“Abusive practices by student loan servicers are well-documented, from misapplying payments to putting students into plans that prolong rather than relieve the student loan debt,” Yasmin Farahi, Policy Counsel for the Center for Responsible Lending and co-author of a policy brief on New Jersey’s student debt crisis. “The servicers’ misdeeds fuel the student loan debt crisis and the burdens are disproportionately shouldered by students of color and women, furthering long-standing economic inequalities. By signing this bill into law, the Murphy administration has taken a critical step in ensuring fair practices for all borrowers facing crippling student debt in New Jersey.”

“New Jersey’s new student loan protections are a major step forward for preventing unfair and predatory practices,” said Chuck Bell, programs director for Consumer Reports. “This bill will help make sure borrowers can get actionable, reliable information about their loans and repayment options. In addition, it creates strong rules of the road to ensure student loan servicers do not mislead borrowers, misapply payments, or provide credit reporting agencies with inaccurate information. We commend the Murphy administration, the Assembly and Senate for enacting these critically important borrower protections.”

Advocates also noted the new law is just one important step in addressing a student debt crisis burdening New Jersey and sweeping across the nation.

“We applaud our elected officials here in New Jersey from tackling all aspects of the student debt and college affordability crisis,’ said Brown-Ruggia. “NJCA looks forward to continue work with the Murphy administration and legislative leaders to build on and expand great initiatives they have already implemented, such as free community college, fair and reasonable repayment plans for state loans, enforcement actions and the bills signed into law today, in order to make post-secondary education as debt free as possible.”

 “I hope my government will soon take the next step in protecting New Jersey residents, and address the issues forcing us to take out these burdensome loans in the first place,” said Baum.