Bill would create protections for private student loan borrowers in N.J.

By: - September 12, 2022 6:51 am

New legislation is aimed at protecting the quarter million New Jerseyans who owe over $9 billion in private student loan debt. (Photo by Paul Morigi/Getty Images for We, The 45 Million)

At 28, Trevor Batchelder is looking to put down roots. He’s getting married next month, and he’d like to buy a home.

But after graduating in 2017 with $150,000 in college debt, he can’t afford the down payment homeownership requires, and he can’t contribute as much as his partner can to wedding costs.

“I see people my age going out, buying a house, getting married, and not being so worried about their finances as they’re doing it,” said Batchelder, who lives in Jersey City. “They’ve either been more fortunate with scholarships and grants, or they’ve chosen cheaper schools, which is something I wish I did — often.”

So Batchelder is keeping an eye on legislation state lawmakers introduced earlier this year that would create more oversight of private education lenders and more protections for borrowers.

Under the bill, lenders would have to make terms more transparent, allow borrowers to apply for loan co-signers to be released, and create protections for borrowers with disabilities that prevent them from working, as well as others who default.

California, Colorado, Connecticut, Illinois, and Maine have passed laws with similar protections, and bills are pending in New York and Louisiana, according to the Student Borrower Protection Center.

Winston Berkman-Breen, the center’s deputy advocacy director and policy counsel, called the protections “common-sense and responsive to known problems in the private student loan market, which for too long has operated without sufficient government oversight.”

Only about 10% of student loan debt owed nationally today is from private loans. Still, it’s a staggering amount — a quarter million New Jerseyans owe more than $9 billion in college debt to private lenders, according to the center.

Private loans typically cost more and lack the basic protections federal student loans offer, leading low-income borrowers to default and risk collection lawsuits, Berkman-Breen said.

Beverly Brown Ruggia is financial justice program director at New Jersey Citizen Action, which is urging New Jersey legislators to pass the bill.

She said reforms are needed, and relief is overdue — especially for borrowers with private loans who were excluded from both loan relief during the COVID pandemic and the Biden administration’s recent student debt relief program.

Batchelder refinanced most of his federal student loans into private loans about four years ago to lower his rates.

“At that time, student debt cancellation wasn’t a thing that much of anybody was thinking about, except maybe Elizabeth Warren as she was plotting out her 2020 presidential run,” Batchelder said.

He agreed the protections New Jersey lawmakers are considering could help curb predatory lending practices. The bill is before the higher education committees in the Senate, where Sen. Sandra B. Cunningham (D-Hudson) is prime sponsor, and Assembly, where prime sponsors are Assembly members William F. Moen Jr. (D-Camden), Mila Jasey (D-Essex), and Britnee Timberlake (D-Essex).

But Batchelder said policymakers must do a better job educating students more generally about “a system that preys on ambitious, young citizens.”

Batchelder also supports federal legislation called the Zero-Percent Student Loan Refinancing Act that’s intended to give relief to borrowers burdened by high-interest loans.

He works for a chemical manufacturer now and has “a pretty nice salary.” But he still owes $100,000 that he expects will take him another five to six years to pay off, despite paying down the debt “pretty aggressively.”

“It holds me back in a lot of ways,” he said. “You just don’t understand the magnitude of what you’re signing up for when you’re 18 years old applying to college.”

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Dana DiFilippo
Dana DiFilippo

Dana DiFilippo comes to the New Jersey Monitor from WHYY, Philadelphia’s NPR station, and the Philadelphia Daily News, a paper known for exposing corruption and holding public officials accountable. Prior to that, she worked at newspapers in Cincinnati, Pittsburgh, and suburban Philadelphia and has freelanced for various local and national magazines, newspapers and websites. She lives in Central Jersey with her husband, a photojournalist, and their two children.