Senator Cunningham Introduces Legislation to Protect Private Student Loan Borrowers
Trenton – Senator Sandra B. Cunningham, Chair of the Senate Higher Education Committee, introduced legislation today to establish protections for private student loan borrowers in the state, who currently owe an estimated $9 billion in private student loan debt.
“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 currently offered by private lenders, not realizing these products do not offer the same protections as federal loans. This legislation would 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 greater protections for student borrowers with private loans.
“Last year, New Jersey, led by Senator Cunningham, took strong steps to crack down on predatory student loan companies, but there is more work to be done for student loan borrowers across the state,” said Seth Frotman, Executive Director of the Student Borrower Protection Center. “Private student loan borrowers have fewer rights and protections than those with federal loans, and less flexibility in hard times. This legislation is the most comprehensive effort in the nation to provide critical protections to private student loan borrowers. Given the new financial stress facing Americans from the economic fallout of the coronavirus, standing up for these borrowers is more urgent than ever.”
The bill would set new standards for the servicing of cosigned private student loans. It would require more robust disclosures, ensure cosigner release is accessible to all borrowers and require cosigners have access to all documents related to the loan, among other things. New Jersey currently has over 130,000 older borrowers, 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, similar to what is already required for federal student loans.
The bill also includes additional protections to expose predatory lenders and allow borrowers to hold them accountable.