Bill Forgiving Student Loan Debt in Event of Borrower’s Death or Permanent Disability Advances

TRENTON — An Assembly panel on Thurs. advanced legislation that would forgive certain student loan debt in the event of a borrower’s death or total permanent disability, a measure sponsored by Assembly Democrats Vince Mazzeo, Bruce Land and Bob Andrzejczak.
“Imagine you’re a family who always pays their bills, has good credit and then you lose a child and in the midst of your grief, you’re saddled with tens, if not hundreds, of thousands of dollars in their remaining student loan debt,” said Mazzeo (D-Atlantic). “That’s just something we can’t allow to happen on our watch.”
The bill (A-2761), a committee substitute that combines three existing bills, 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 bill applies to loans issued under the NJCLASS program – New Jersey College Loans to Assist State Students – 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 NJCLASS Loan Program, the authority shall fully discharge the obligation of the student borrower and a parent or guardian who cosigned the loan. The executor or administrator of the student borrower’s estate shall provide written notification to the authority of the student borrower’s death and shall provide the authority with a certified copy of the death certificate within 120 days of the student’s borrower’s death.
“On top of an already painful grieving process, some families have actually been harassed by loan collectors. That should never happen in New Jersey,” said Land (D-Cape May/Atlantic/ Cumberland).
In the event that an eligible student borrower becomes totally and permanently disabled, the authority shall fully discharge the obligation of the student borrower and a parent or guardian who cosigned the loan. To qualify for the loan discharge the student borrower shall provide the authority with a written statement from a physician, who is a doctor of medicine or osteopathy and is legally authorized to practice, certifying that the student borrower is totally and permanently disabled.
“In some cases, a spouse ends up widowed and struggling to support a family and then they are hit with a student loan bill on top of it all. This bill will make sure that doesn’t happen,” said Andrzejczak (D-Cape May/Atlantic/Cumberland).
In the event that an eligible student borrower becomes temporarily totally disabled, the authority shall grant a deferment of payment of loan principal and interest. To qualify for the loan deferment, the student borrower shall provide the authority with a written statement from a physician, who is a doctor of medicine or osteopathy and is legally authorized to practice, certifying that the student borrower is temporarily totally disabled.
The deferment would begin on the date that the student borrower’s temporary total disability is certified to begin and shall end on the date that the temporary total disability is certified to end. Interest on the loan would not accrue during the period of deferment.
The bill was advanced by the Assembly Higher Education Committee.