You probably wouldn’t be surprised to learn that your cable company has perks or discounts it will only reveal when asked, but you’d hope a government agency wouldn’t deliberately hide a program intended to help families struggling to pay off student loan debts of a deceased loved one.
As we’ve previously reported, family members and loved ones who co-sign loans for private student loan borrowers can end up on the hook for the debt if that student passes away. There are often programs to make payments less painful, or even forgive this debt, but an investigation by ProPublica found that the agency overseeing New Jersey’s student loan program has twice directed staff to only disclose beneficial information when someone asks for it.
According to the ProPublica report, NJ’s Higher Education Student Assistance Authority (HESAA) sent at least two emails — one in 2013 and another in 2016 — detailing its policy of keeping these assistance programs a secret unless asked.
“Families of deceased borrowers (or surviving co-signers) must inquire if HESAA has a policy on loan forgiveness,” a supervising staffer wrote in one email [PDF] to employees in May 2016. “We should not be volunteering this information.”
“Only advise the co-signer/co-borrower about loan forgiveness when asked,” wrote the same staffer in a 2013 email [PDF] about what to do when borrowers die.
Despite telling ProPublica that the emails do not reflect actual agency policy, officials did not provide follow-up emails correcting the 2013 and 2016 directives.
“The emails you shared with us do not accurately reflect the Authority’s policy or practice on loan forgiveness,” Marcia Karrow, the agency’s chief of staff, tells ProPublica, adding that “in person training was provided” regarding the misinformation circulating in the emails.
HESAA tells ProPublica that over the past four years it has provided forgiveness for 35 of 50 co-signers or co-borrowers who requested assistance after a borrower died or became disabled.
Still, that doesn’t take into account the number of people who didn’t know to ask for assistance, ProPublica points out.
One of those people is a woman whose son was murdered in 2015. She told ProPublica that when she contacted the New Jersey state agency, she was offered their condolences, but no assistance.
“After careful consideration of the information you provided, 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,” the letter she received stated.
Because the agency is backed by the state, it has the power to garnish wages, revoke state income tax refunds, suspend professional licenses, and even take away lottery winnings from delinquent borrowers — or their co-borrowers/co-singers — without getting a court’s approval.
Harrow, with HESAA, tells ProPublica that despite the policies and stringent rules, the “vast majority of these borrowers are happy with the program and are pleased that NJCLASS provided them the opportunity to pursue the higher education of their choosing.”
ProPublica reports that since the emails have been uncovered, state lawmakers have called for a review of HESAA.
“Our state must review the existing system with a more compassionate eye to those situations that have such a destructive impact on people who simply sought to better their lives by earning a college degree,” New Jersey assemblyman Mila Jasey said in a statement.
While ProPublica focuses just on New Jersey, the issue of carrying on a loved one’s private student loans after their death has become a national issue. Last year, lawmakers introduced legislation that would require private student loan companies to forgive outstanding debt if a borrower dies.
Like the current law regarding the forgiveness of federal students loans when a borrower dies, the legislation would have require a family member or other representative to provide a certified copy of the death certificate to the lender or loan servicer.
New Jersey Student Loan Agency to Staff: Don’t Tell Borrowers About Help Unless They Ask [ProPublica]
by Ashlee Kieler via Consumerist