The Star-Ledger

Student-loan Rep Needed In N.J. To Prevent Disasters

The Star-Ledger — September 4, 2018

By Beverly Brown Ruggia
Guest columnist

This past week, thousands of New Jersey parents proudly accompanied their children off to college. Sadly, they will take that journey without Seth Frotman along for the ride.

Since 2011, Frotman has worked for the Consumer Financial Protection Bureau on behalf of military veterans and students across the country. As the student loan ombudsman, he worked tirelessly with his staff to go after predatory lenders, returning $750 million dollars to borrowers who were wronged. Frotman resigned this week, accusing the Trump administration of "siding with predatory lenders over consumers and enacting policies that will lead to 'far-reaching harm,'" the Washington Post reported.

Almost a million New Jerseyans carry a combined $33.5 billion in student-loan debt. Collectively, student debt amounts to $1.5 trillion nationwide. The debt is owed by our children who are still in school or who have graduated. It is owed by seniors who have co-signed loans, or are struggling to pay off their own student loans. The borrowers include veterans, teachers, faith leaders, family members, our friends and our employees. Many are low-income families who cannot to move into middle-class stability because of this heavy burden of debt. Some have amassed debt from predatory for-profit college loans that left them without a valuable degree or the ability to get a better job. Many have put off starting families or buying homes because they owe enormous debt dubbed "houseless mortgages."

College tuition continues to rise, and the abuses of student-loan servicers make the situation only worse. In 2017, the Consumer Financial Protection Bureau and several state attorneys general sued Navient, one of the nation's largest student-loan servicers, for failing to put borrowers into income-based repayment plans for which they qualified. Instead, the company steered them into forbearance, which adds thousands of dollars in interest onto each student's debt. Clearly, Navient did not work in the best interest of its borrowers.

New Jersey has the responsibility and the right to take action against such practices.

The New Jersey Student Loan Ombudsman bill passed last year in both chambers, but was pocket-vetoed by thenGov. Chris Christie. The Consumer Financial Protection Bureau saw increase of 77 percent in complaints from New Jerseyans about the student-loan servicing sector in 2017. The bill would protect borrowers from the abuses described in these complaints. Recognizing the urgency bill sponsors, state Sen. Sandra Cunningham, D-Hudson, and Assemblyman Gary Schaer, D-Passaic, reintroduced it early this year.

The Senate passed the bill (S1149) in February, which would license student servicers and give the state the authority to prohibit misrepresentations, payment misapplications and false credit reports. The bill also calls for an Office of Student Loan Ombudsman, in the Department of Banking and Insurance, with the authority to analyze, review and resolve complaints, educate student borrowers on their rights and responsibilities, and to recommend policies. Connecticut, Illinois and California have already passed similar legislation.

Despite a bipartisan letter from 30 state attorney generals, including New Jersey's, federal Education Secretary Betsy DeVos insists that only the federal government has authority over student-loan servicing. Passing the New Jersey Student Loan Ombudsman bill will help cement the right of states to address abuses.

Last month, Gov. Phil Murphy launched his free community college program. This bold new policy will allow many New Jerseyans to get the education they deserve. Passing the Student Loan Ombudsman bill will protect borrowers from deceptive, unfair and abusive treatment, as they work to repay student loans, helping them to move on to the lives they deserve.

With the U.S. Department of Education turning its back on student-loan borrowers and with the Frotman's departure from the Consumer Financial Protection Bureau, New Jersey needs to implement strong protections for student-loan borrowers. The student-loan debt crisis in this country does not amount to dreams deferred. It amounts to dreams destroyed. We call on the New Jersey Assembly to pass A455 right away and for the governor to sign the bill into law immediately. Almost a million New Jerseyans carry a combined $33.5 billion in studentloan debt. Collectively, student debt amounts to $1.5 trillion nationwide.

Beverly Brown Ruggia is the financial justice advocate for New Jersey Citizen Action, the state's largest progressive coalition working for social and economic justice for all.

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