Legislation sponsored by state Assembly Democrats Joann Downey and Eric Houghtaling (both D-Monmouth) that will forgive certain student loan debt in the event of a borrower’s death or total permanent disability has been signed into law by Gov. Chris Christie.
“Federal student loan debt is already forgiven in the event of a borrower’s death. We should exercise compassion and common sense at the state level and follow suit,” said Downey.
“If someone’s life is cut short before they were able to put their education to use, the compassionate thing to do, for the sake of their grieving families, is to forgive these loan debts,” said Houghtaling.
The new law (S-743/A-2761) directs the state Higher Education Student Assistance Authority to forgive certain student loans in the event of a student borrower’s death or total and permanent disability and grant deferment for temporary total disability.
The law applies to loans issued under the NJCLASS program – New Jersey College Loans to Assist State Students – which helps cover college costs not already covered by other sources of grants, scholarships and loans, according to a press release.
The program offers low-cost rates on supplemental loans to New Jersey residents attending an eligible in-state or out-of-state school, as well as out-of-state students attending a school in New Jersey.
In the event of the death of an eligible student borrower under the NJCLASS Loan Program, the authority will fully discharge the obligation of the student borrower and a parent or guardian who cosigned the loan. The executor or administrator of the student borrower’s estate will be required to provide written notification to the authority of the student borrower’s death and will provide the authority with a certified copy of the death certificate within 120 days of the student’s borrower’s death, according to the press release.
In the event that an eligible student borrower becomes totally and permanently disabled, the authority will fully discharge the obligation of the student borrower and a parent or guardian who cosigned the loan. To qualify for the loan discharge the student borrower will be required to provide the authority with a written statement from a physician, who is a doctor of medicine or osteopathy and is legally authorized to practice, certifying that the student borrower is totally and permanently disabled, according to the press release.
In the event that an eligible student borrower becomes temporarily totally disabled, the authority will grant a deferment of payment of loan principal and interest. To qualify for the loan deferment, the student borrower will be required to provide the authority with a written statement from a physician, who is a doctor of medicine or osteopathy and is legally authorized to practice, certifying that the student borrower is temporarily totally disabled, according to the press release.
The deferment would begin on the date the student borrower’s temporary total disability is certified to begin and end on the date the temporary total disability is certified to end. Interest on the loan would not accrue during the period of deferment.
