Image courtesy of AC/DC: https://youtu.be/qKggnBh2Mdw
It’s been more than a year since my last post and it seems as though the issue of HESAA student loans in the Garden State have been put on the back burner. There’s talk of a complete solution to the problem and everyone can now “move on” from NJClass devil loans. Has HESAA HELL indeed frozen over? My response to this question:
Oh, HELL no!
However good recent HESAA reforms have been for a small group of us, it certainly doesn’t change the fact that every month a relentless bill arrives in the our mail and I, along with countless others, are still paying exactly what we have always had to pay with absolutely no debt relief.
HESAA Reforms From 2016 Until Now, What Are They?
The first and most famous change happened in December of 2016 under the Chris Christie administration that changed the rules surrounding deaths of students. Propublica wrote, “After a ProPublica and New York Times investigation into New Jersey’s student loan program, Gov. Chris Christie stayed silent. On Monday, he signed a reform bill ending its most onerous practice.” While it’s arguable what their “most onerous practice” could be, the fact is that parents of deceased children will no longer have to pay for a NJClass loan, as I told you about in 2015. A win for borrowers, right? Yes! HESAA take that, but let’s be honest, this change affected a very small population of borrowers.
You can read the Propublica victory lap here: https://www.propublica.org/article/new-jersey-will-no-longer-collect-loans-from-families-of-dead-students
Enter Phil Murphy and Sandra Cunningham: Friends of Wall Street
A March 20, 2019 op ed by Deputy Majority Leader and head of the State Senate Education Committee Sandra Cunningham posted on NJ.com is instructive in showing exactly what has been done since the heady days of 2016.
- Senate bill S3125 created two income based repayment options
The first income based repayment option is called RAP. “RAP will allow borrowers to make reduced payments equal to 10 percent of the monthly income of all parties on the loan. Monthly payments could be reduced to as little as $5 a month for up to two years, if the borrower’s financial situation warrants it.” If a person is eligible for this repayment option HESAA would also cover the interest that accrues on this loan for the two years that are allowed for this plan. This of course would assure that the principal balance would be intact for two more years thus kicking the debt further into the future and not solving any debt problems for the borrower.
The second income based repayment option is the awkwardly named HAIRP (not a hair growth formula). This option “allow[s] for reduced payments equal to 15 percent of the monthly income of all parties on the loan. The loan repayment term would be extended to 25 years, at the end of which any remaining balance would be forgiven.” So if a borrower exhausts the two years allowed under the first plan this one would come in for those people whose income is still not enough to cover the HESAA payment. It is also worth noting that the Income Based Repayment option for federal student loans only requires ten percent of a borrower’s income based on their federal tax returns.
- Senate bill S2056 provides rehabilitation for borrowers in loan default
This was a major landmark for HESAA reform because up until Spring of 2019 there were absolutely no protections afforded to borrowers in default. Previously, HESAA borrowers were fed like lambs to their lawyers who had the full weight and power of the State of New Jersey to levy huge fees on borrowers that only went to HESAA’s lawyers and did not satisfy any part of the loan. Neither did HESAA’s lawyers, as Cunningham points out, “need a court order to garnish wages or tax returns” – a clear sign of corruption.
An article by Colleen Day dated May 16, 2018 titled “End of Debt Nightmare in Sight for Students Who’ve Defaulted on Loans” explains details of this law, including the fact that a person who was in default to HESAA also had their credit ruined, which in turn created a barrier to earning better income to pay down the debt and steep fees. For a long time this group of borrowers were on their own, in an even lower circle of HESAA Hell, unable to pay and unable to get out of the debt or even repair their credit score. Thankfully this is no longer the case for this group of borrowers (which HESAA claims is a small number but advocates argue is larger.)
HESAA Reforms: What They Aren’t
There’s no denying our situation is slightly better than the absolute lack of options that existed before these reforms and everyone should applaud them. However, this form of “relief” only masks the underlying problem – the lack of grants and a bail out coupled with reduced tuition costs for average working people who had to take these out in the first place. Reforms like those outlined above make the problem of HESAA and NJClass loans arguably worse in certain ways. They make an intolerable situation slightly more comfortable. These reforms are a snowball to cool you while you burn in perpetual loan servitude. We all know snowballs have a short shelf life in hell. They do not deal with the issue that we should not have had to take these out in the first place in order to get a decent education in this state, an education that leads to a real living wage.
This author was one of the first to advocate on behalf of parents who were forced to continue to pay HESAA despite losing their child so obviously I applaud the abolition of this practice. It looked good for legislatures – in the face of mounting national attention to HESAA’s practice of screwing parents of deceased borrowers – to make a quick change that affected relatively few borrowers and kept the ill-gotten money rolling in for the majority of loans. It is we, the living, who must face NJClass loans and the everlasting consequences of the decision to borrow for college.
What about HESAA loan forgiveness after twenty five years of paying fifteen percent of your income to a Wall Street investor? Great! Now you can extend your hell for an almost indefinite period. HESAA got a facelift, not a fundamental reform. Thanks to Democrats like Murphy and Cunningham HESAA will continue long after 2019 preying on students and exacting a heavy toll on the lives of young people and those who become more mature under the weight of these hellish loans.
As with all student loans it is an instrument that is used primarily as a wall street investment tool. The state has floated these bonds, each with an NJ citizen and co-signer’s names attached, knowing full well that not everyone could possibly have paid them back. None of that mattered to either Democrats or Republicans who pumped these out for decades – and continues to float them today despite the fact that now you can pay 10 percent or 15 percent of your meager salary to the private investor via the State of NJ.
What We Need is Full Debt Cancellation
A quote from Cunningham’s article about the nature of these loans must be examined. She says that,“Because the loans are underwritten by state bonds, the state is required to pay purchasers the amount agreed upon in the bond, therefore the state would be responsible for any amount not repaid by the student loan borrower.” Essentially a HESAA NJClass loan is nothing but a twisted kind of corporate welfare. They are responsible to pay the *owner* of the loan but not the people for whom the loan was originally intended to educate. This is a completely backwards public education policy, it is the working class borrower who deserves and needs the money to move forward financially so they should be offered a grant and not a loan that takes forever to pay back.
These loans financed by Wall Street should never have been allowed to infect public education and every last one of them was a crooked deal for those of us wanting to attend college, a classic predatory loan. No guarantees were made to us except that we will have to pay and pay and pay, while all the guarantees belong to those few who are already rich, using their money to force people with little means to pay and pay and pay. We must change this and we will change this. We need now more than ever a plan for full debt cancellation and full funding of college for citizens of this state who want to expand their knowledge and skills and earn a better living in one of the most expensive states in the US.