NJ Students Find HESAA Loans Unforgiving

By Brenda Flanagan

His family’s Facebook page contains a shrine to their murdered son, Kevin DeOliveira — a college kid, shot to death while owing student loans. The feds forgave Kevin’s debts. But New Jersey sent a letter to his grieving parents, who cosigned for his state loans, noting “…the Authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you.” Even death won’t absolve you from a Jersey student loan, some attorneys say.

“It doesn’t matter if you’re dead or if you lose a job or if you have trouble finding a job out of school — while they technically have deferment and forbearance programs, they don’t want to work with borrowers,” said bankruptcy attorney Jennifer Weil.

“I’m stuck in this black hole of student loan debt,” said Brian Carney.

Carney went to Fairleigh Dickinson, graduated owing $80,000 to New Jersey’s Higher Education Student Assistance Authority. He couldn’t repay what it demanded — more than $1,000 a month. He says the state put him in default — sued him and harassed his step-dad, who had cosigned the loan.

“It’s just awful every day you don’t know what’s going to happen. This has affected so many aspects of my life and it’s not fair. I want to pay my loans and they refuse to work with me,” Carney said.

“It’s state-sanctioned loan sharking,” said Carney’s attorney Daniel Frischberg. “I get calls all the time from people who are paying $1,200, $1,500. They just need a few months to get on their feet and the state just basically laughs at them.”

Carney’s lawyer says New Jersey student loans — called NJCLASS — may look like the federal government’s education loan program but it’s not. It’s private — 65,000 loans worth $1.9 billion, all funded by Wall Street investors — so it’s run with ruthless efficiency.

“The money for these student loans comes from private investors — people who are investing in bonds. And they need to repay those investors, so of course they’re very aggressive… Once there’s a judgment in place, they can put a lien on any real estate they own in the state of New Jersey. With the judgement, they can garnish wages,” Weil said.

“They can take your professional license away, they can offset lottery winnings, they can offset your taxes, they can pretty — everything that other places can’t do, and that’s the biggest problem,” Frischberg said.

HESAA’s loan material notes, “…there is no cancellation of a student loan obligation when there are other surviving parties to the loan.” It does urge borrowers to consider getting life insurance. HESAA also said, “If the student borrower is struggling it is incumbent upon the cosigner to assist the student during that period,” and called the loan-sharking comment, “…a completely scurrilous and unfounded statement made by an adversary. The thousands of students and families who were able to obtain a higher education, pursue a career and repay the loan in accordance with the terms and conditions of the promissory note are testament to the complete inaccuracy of this utterly sensational declaration.” HESAA also insists it does offer loan modifications. But that’s more in theory than in practice, NJ Legal Services says.

“The NJCLASS loans are almost unique in not having their own built-in set of alternatives. They write the regulations so it’s really in their hands” said senior attorney at NJ Legal Services, David McMillin. When asked if they could fix it he said, “We think so.”

For some borrowers the only way out is bankruptcy. It doesn’t cancel the debt but it might let a judge set manageable monthly payments.