Phil Murphy: Time to Reel In Christie’s ‘Loan Sharks’

Phil Murphy, Democratic candidate for governor, today called for reforms at New Jersey’s student-loan agency to protect borrowers and their families from crushing debt burdens that can prevent them from getting ahead long after graduation.

An investigative report conducted by The New York Times and ProPublica found that the loans provided through the New Jersey Higher Education Student Assistance Authority (HESAA) carry among the most onerous rules in the country, impeding the ability of students to work with the agency to modify payment schedules, authorizing wage garnishments without a court’s approval, and even requiring families to pay back the full amount of the loan when a student tragically dies.

One bankruptcy attorney interviewed for the report called HESAA’s program “state-sanctioned loan sharking.”

“It’s beyond comprehension that New Jersey would allow its student loan program to become something more akin to a rogue collection agency than an organization investing in the success of the next generation,” said Murphy. “This system cries out for reform. HESAA should be required to work with students and families to help them succeed, not strong-arm them into bankruptcy. It’s time that New Jersey had its students’ backs, instead of stabbing them there.”

Murphy said as governor he would require HESAA to work on new loan-payback terms should a borrower lose his or her job, and stop unnoticed wage and other financial garnishments or revocation of professional licenses. He said he also would take steps to cut Wall Street out from the loan programs, as the federal government has done — as opposed to the Christie administration’s work to increase Wall Street’s role to the detriment of students.

He said HESAA should also be brought into line with other state and federal loan programs in wiping clean loans in the event that a borrower dies or becomes permanently disabled an unable to work. Murphy noted that other states are not only not targeting financially distressed borrowers, but are actively developing refinancing programs to reduce their financial burdens.

“The promise of a student loan is that you’ll be able to get ahead in life, yet HESAA has used rules that do nothing but hold too many back,” said Murphy. “For many students, getting a college degree is their ticket to joining the middle class and doing better than their parents. It’s time for HESAA to step up and work with those who seek its help, not against them.”