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New Jersey's official college loan agency has some of most stringent repayment rules in the nation, shackling borrowers with conditions so strict that they can lead to financial ruin and forcing some families to continue paying...

N.J.'s college loan program tactics taken to task in scathing report

New Jersey's official college loan agency has some of most stringent repayment rules in the nation, shackling borrowers with conditions so strict that they can lead to financial ruin and forcing some families to continue paying...

N.J.'s college loan program tactics taken to task in scathing report

New Jersey's official college loan agency has some of most stringent repayment rules in the nation, shackling borrowers with conditions so strict that they can lead to financial ruin and forcing some families to continue paying off debt even if a borrower dies, an investigation from the New York Times and ProPublica has found.

Robert Sciarrino 

New Jersey Higher Education Student Assistance Authority, HESAA, offers loans to state residents attending in-state or out-of-state colleges, with interest rates between 4.48 percent 8.23 percent.

Students attending New Jersey colleges from others states can also qualify for New Jersey College Loans to Assist State Students, or NJCLASS loans.

The agency is the largest of its kind in the country, with $1.9 billion in total loans, according to the New York Times. Since the program is backed by the state, it doesn't require court approval to aggressively collect on loans through wage garnishing, voiding of state income refunds or revoking a professional license, the report says. 

"It's state-sanctioned loan-sharking," Daniel Frischberg, a bankruptcy lawyer, told the Times. "The New Jersey program is set up so that you fail."

While other states with similar higher education loan programs, including Massachusetts, automatically forgive loan debt if the borrower dies or becomes disabled, the New Jersey agency reviews each request on a case-by-case basis, according to ProPublica.

According to U.S. News & World Report, federal loans are written off if the borrower dies or becomes permanently disabled.  

The agency's chief of staff, Marcia Karrow, told the Times and ProPulica that the majority of borrowers are happy with HESAA.

Craig McCarthy may be reached at [email protected] Follow him on Twitter @createcraig. Find NJ.com on Facebook.    

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