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Pallone Introduces Legislation to Protect Student Loan Borrowers

December 6, 2016
Press Release
Washington, DC - Today, Congressman Frank Pallone, Jr. (NJ-06) introduced the Student Borrower Higher Education Lending Protection (“HELP”) Act, new legislation to protect student borrowers and co-signers from egregious debt collection practices. The legislation comes in response to troubling lending practices by the New Jersey Higher Education Student Assistance Authority (HESAA) and other private lenders – including pursuing student loan repayments from disabled borrowers and from the families of borrowers who have passed away. Representatives Donald M. Payne, Jr., Steve Cohen, Bonnie Watson Coleman and Gwen Moore are original cosponsors. In October, Congressman Pallone announced the bill at Middlesex County College in Edison, NJ with Senate President Stephen Sweeney, Senator Sandra Cunningham and students. Sweeney and Cunningham, along with Senate and Assembly colleagues, were the chief architects of legislation signed into law on Monday that protects New Jersey students from HESAA’s harmful lending practices and make college more affordable and accessible. The Student Borrower HELP Act amends the Truth in Lending Act with three main provisions for private lenders, including HESSA. The provisions include: • Requiring total loan forgiveness for any student borrower who is subsequently determined to have a permanent disability or any family member who is a cosigner of a loan taken out by a student borrower who dies. • Deferment of loan payments (without any financial penalty) for borrowers with a temporary disability. • Requiring private lenders to disclose the default rates in their student loan portfolio on loan documents so borrowers are aware before signing any documents of the financial risk of entering into a contract with that lender. The need for federal legislation is clear because the problems with aggressive debt collection practices go far beyond HESAA. According to the Consumer Financial Protection Bureau, despite the fact that many private student lenders advertise loan forgiveness programs for loan co-signers in the event the student borrower is unable to repay the loan, 90 percent of applications for co-signer forgiveness are denied. Borrowers in New Jersey and around the country deserve strong consumer protections around their student loans. “Earning a college degree is a major milestone that helps put Americans on the road to success,” said Pallone. “The last thing borrowers and their families should have to face is aggressive debt collection practices if the unthinkable happens. The Student Borrower HELP Act would take necessary steps to guarantee safeguards for borrowers and their families.” The Student Borrower HELP Act is the latest congressional effort to make college more affordable, more accessible, and less burdensome. Congressman Pallone is already the cosponsor of HR 1434, the Bank on Students Emergency Loan Refinancing Act, which would allow undergraduate borrowers repaying private or public student loans to refinance those loans at an interest rate of 3.86 percent. ###