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The state of New Jersey student loan program provides various student loan financing programs. It has been criticized for remarkably inflexible terms and zealous collection practices. Also, acceptable circumstances for a reprieve are rare. This includes not forgiving student loans when the debtor dies.
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Higher Education Student Assistance Authority
The Higher Education Student Assistance Authority is a New Jersey chartered state agency, charged with administering the state based student loan program. It is the largest in the United States by a significant proportion. Current loans outstanding amount to $1.9 billion. It is believed that its remarkably inflexible policies “can easily lead to financial ruin.”
Repayments are not based on income adjustment. Unemployment and other financial hardships rarely result in reprieves. Interest rates are higher than comparable federal programs.
The state of New Jersey is permitted to garnish wages, rescind professional licenses, disallow income tax refunds, and forfeit borrower’s lottery winnings. Court approval is not required. Collection practices have become more aggressive since 2010. Notably, families’ credit has been damaged while being compelled to surrender their salaries due to agency regulations.
The catalyst appears to be, “the state depends on Wall Street investors to finance student loans through tax-exempt bonds and needs to satisfy those investors by keeping losses to a minimum.” The programs collection practices have been described as having within their toolkit “a cudgel that even the most predatory for-profit players cannot wield" and that is "the power of the state".
New Jersey Governor’s Office
The Governor of New Jersey appoints the executive director of the program. The current Governor, Chris Christie, has stated that the agency’s policies and collection behaviors are not within his purview. Also, the appointment of 12 of the 18 board members of this organization is within the discretion of the Governor’s office.