Senate Advances Cunningham, Gopal Bill to Protect Private Student Loan Borrowers

Trenton – Legislation to protect private student loan borrowers, sponsored by Senate Higher Education Chair Senator Sandra B. Cunningham and Senator Vin Gopal, cleared the Senate today.

“With the current public health crisis, regulation and oversight of private student loan lenders is needed now more than ever,” said Senator Cunningham (D-Hudson). “Many people who have lost their jobs and are struggling financially may be enticed by the low-interest rates offered by private lenders, not realizing they do not offer the same protections as federal loans. This legislation will ensure those who refinance, or those who may choose to go back to school after this crisis, are fully protected.”

The bill, S-2358, would require the registration of private education lenders and establish protections for student borrowers with private loans. Currently, New Jersey borrowers owe an estimated $9 billion in outstanding student loan debt.

“Young adults who take out private student loans do so out of a desire to further their education and better themselves,” said Senator Gopal (D-Monmouth). “For many, obtaining a college degree is impossible without this financial assistance. We must do all we can to protect these students who may not grasp fully the terms of these loan programs. We need to make sure that private lenders aren’t taking advantage of their customers.”

The bill would set new standards for the servicing of co-signed private student loans. Among other provisions, it would require more robust disclosures, ensure the co-signer release is accessible to all borrowers and require co-signers have access to all documents related to the loan. New Jersey currently has over 130,000 older borrowers; these borrowers are often co-signers helping their children or other relatives attend school.

The legislation would also require disability discharge options for all private student loans in the state.

The bill also includes protections to expose predatory lenders and allow borrowers to hold them accountable.

The bill was released from the Senate by a vote of 22-6.