Pallone Unveils Legislation to Protect Student Loan Borrowers
NEW BRUNSWICK, NJ– Today, Congressman Frank Pallone, Jr. (NJ-06) announced his introduction of 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 will address lending practices by the New Jersey Higher Education Student Assistance Authority (HESAA), including its refusal to allow loan forgiveness to a mother whose son died and a borrower who battled cancer and became unemployed after graduating from college. Congressman Pallone discussed the legislation with Senate President Stephen Sweeney, Senator Sandra Cunningham and students at Middlesex County College in Edison, NJ. Sweeney and Cunningham are working in Trenton to advance legislation that would also protect New Jersey students from abusive lending practices and make college more affordable and accessible.
The bill 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.
“To succeed in the 21st century economy young Americans needs to have access to higher education,” said Pallone. “However, too many New Jersey families face daunting student loan bills and financial institutions unwilling to provide flexibility for those facing hardships. The least we can do is protect those families that are put in extraordinarily difficult situations and protect them from harassment from debt collectors.”
“College affordability is a shared priority that Congressman Pallone is fighting for in Washington as we fight for it in Trenton,” said Senate President Steve Sweeney, who recently introduced a comprehensive, nine-part package of bills to help make higher education more affordable and more accessible. “Helping to reduce and control student debt is an important part of the effort. Students should be treated fairly when they take out loans and they should be treated fairly in managing their debt and making payments. I applaud Congressman Pallone for advocacy for the HELP Act. It provides consumer protections for college students and their families so they can afford a degree and can manage their loans. We can’t open the door of college opportunity for students only to slam it shut with the burden of debt. We must keep higher education available and affordable for all students.”
In August, Congressman Pallone solicited opinions from students at Rutgers University on their experiences with student loans and what they would do to assist New Jersey families facing $31 billion in student loan debt. 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.