Legislation sponsored by Assemblyman Andrew Zwicker that forgives certain student loan debt in the event of a borrower’s death or total permanent disability has been signed into law. Gov. Chris Christie signed the bill into law on Monday.
Last July, an investigation by ProPublica and The New York Times showed how New Jersey’s student loan agency aggressively sought repayment of loans with already burdensome terms, even after some of the recipients had died. The collection efforts traumatized grieving families, and placed overwhelming financial burdens on some.
“To expect a student’s family or other survivors to pay their college loan debt in the event of their death is cruel and unacceptable. We can do better than that,” said Zwicker (D-South Brunswick).
The new law brings the state’s program closer in line with federal student loans, which are forgiven when students die or become permanently disabled. The law directs the state Higher Education Student Assistance Authority to forgive certain student loans in the event of a student borrower’s death or total and permanent disability and grant deferment for temporary total disability.
The law applies to loans issued under the New Jersey College Loans to Assist State Students Program, which helps cover college costs not already covered by other sources of grants, scholarships and loans. The program offers low-cost rates on supplemental loans to New Jersey residents attending an eligible in-state or out-of-state school, as well as out-of-state students attending a school in New Jersey.
In the event of the death of an eligible student borrower under the program, the authority will fully discharge the obligation of the student borrower and a parent or guardian who co-signed the loan. The executor or administrator of the student borrower’s estate must provide written notification to the authority of the student borrower’s death along with a certified copy of the death certificate within 120 days of the student borrower’s death.
In the event that an eligible student borrower becomes totally and permanently disabled, the authority will fully discharge the obligation of the student borrower and a parent or guardian who co-signed the loan. To qualify for the loan discharge the student borrower must provide the authority with a written statement from a physician certifying that the student borrower is totally and permanently disabled.
In the event that an eligible student borrower becomes temporarily totally disabled, the authority will grant a deferment of payment of loan principal and interest. To qualify for the loan deferment, the student borrower must provide the authority with a written statement from a physician certifying that the student borrower is temporarily totally disabled. Interest on the loan would not accrue during the period of deferment.