Student loans are notoriously difficult to get out of, but in some cases, not even death can earn you forgiveness.
An investigation by ProPublica and the New York Times uncovered the many disconcerting practices of New Jersey’s Higher Education Student Assistance Authority (HESAA), the largest state-based student loan program in the country.
After her son’s death, Marcia DeOliveira-Longinetti received a letter from the agency that offered their condolences, but said, “After careful consideration of the information you provided, the authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you.”
As horrible as this sounds, it is not an isolated incident.
Another HESAA borrower was struggling to repay his loans after he was diagnosed with cancer and lost his job. The agency refused to defer the loans and he was sued by the state.
New Jersey loan repayments cannot be adjusted based on income, and unemployed graduates, or those facing financial difficulty, disability — or even death — are rarely given a break.
The investigation found that “New Jersey can garnish wages, rescind state income tax refunds, revoke professional licenses, even take away lottery winnings — all without having to get court approval.”
A bankruptcy lawyer called the program “state-sanctioned loan-sharking.”
When the Obama administration and Congress overhauled the student loan industry in 2010, instead of downsizing, New Jersey began expanding its loan program, replacing federal loans with state loans.
The Times/ProPublica investigation found that the agency relies on loan revenues to cover about half of its administrative budget.
New Jersey Governor Chris Christie appointed HESAA’s executive director, has the power to appoint a majority of its board members, and can veto actions taken by the board. However, Christie’s office chose not comment on the investigation.
