Student borrowers in the state of New Jersey will soon have stronger protections after acting Governor Sheila Oliver signed a bill that will regulate companies that service student loans.
Oliver signed bill S1149, which will crack down on student loan servicing companies that indulge in deceptive practices by providing flawed information to student borrowers, placing them in repayment plans that are not best designed to assist in paying off their loans. The new law would also require such companies to be licensed by the New Jersey Department of Banking and Insurance (DOBI).
The bill was co-sponsored by Senators Sandra Cunningham, Chris Brown, Assemblymen Gary Schaer, Raj Mukherji, Jamel Holley, Joe Danielsen, and Assemblywoman Annette Quijano.
“This issue is personal for me—I worked with students first-hand figuring out how to pay for college and then went on to develop the original Department of Education Financial Aid Shopping Sheet during the Obama administration. Those experiences helped me see the deficiencies in our aid information system. No student should be left in the dark about what college costs or whether their financial aid is a grant or a loan,” said Secretary of Higher Education Zakiya Smith Ellis.
Within DOBI, the law also mandates the creation of a New Jersey Student Loan Ombudsman who will monitor and review complaints against student loan servicers while help borrowers with r unanswered questions about student loans.
“This bill appoints an ombudsman who will advocate on behalf of families as they prepare to finance the education of their children,” said Senator Cunningham.
“Aspiring to a college degree should never threaten the financial viability of your household.”
In June, the state of Maine had enacted a similar bill that requires student loan lenders who do business in Maine to register themselves and authorizes state officials to investigate lenders who commit prohibited acts. The California Assembly has also passed a bill that offers student loan borrowers the same comprehensive protections that consumers with mortgages and credit cards enjoy.
Last year, a federal judge even ruled against the Department of Education for delaying the implementation of key Borrower Defense Regulations, aimed at providing relief to debt-ridden students defrauded by higher education programs.
While ruling in favor of 19 states and two former students, the judge alleged DeVos of “improperly” postponing the Obama-era regulations which governed the “borrower defense to repayment.”