NJ lawmakers hear horror stories about state student loan program

TRENTON — A mother still paying off student loans for her murdered son. Another whose son declared bankruptcy after he was unable to keep up with payments. A young woman who worried she would never be able to have a child because of her six-figure debt.

These were stories New Jersey lawmakers heard Monday as they took testimony on the state's Higher Education Student Assistance Authority (HESAA), which recently drew scrutiny in a ProPublica investigation.

The investigation, published last month in collaboration with the New York Times, described the state's loan program as an anomaly among government lending programs for students, "with extraordinarily stringent rules that can easily lead to financial ruin."

The investigation — which detailed how the loan program doesn't adjust payments based on income, among other rules — spurred lawmakers to hold Monday's joint hearing before the Senate Legislative Oversight and Higher Education Committees.

Neither HESAA's director, Gabrielle Charette, nor chief of staff, Marcia Karrow, accepted invitations to testify.

In a letter to the committee read by Sen. Bob Gordon (D., Bergen), Charette said that the authority was reviewing its policy for loans in cases of student death or total disability, and that it would be "premature" for staff to appear until the review had returned "complete information."

Gordon also read information submitted by Karrow, including administrative regulations that allow for loan forgiveness only in cases of death or total disability when there is no cosigner on the loan.

However, HESAA has a "well-established practice" of forgiving loans if a student dies and the cosigner demonstrates "severe financial hardship," Karrow said, according to the information read by Gordon.

After Marcia DeOliveira-Longinetti's son was murdered a year and a half ago, she was required to continue making payments on the loans he received from HESAA, she told lawmakers Monday.

While DeOliveira-Longinetti, of Manahawkin, knew she had entered into a contract, she told lawmakers there should be an exception.

"This doesn't happen every day," she said of her son's death. "Every month I have to write a check, for the next seven to eight years, reminding myself my son is not going to graduate."

Others who testified said they weren't fully informed of the terms they were signing on to.

Deborah Carney of East Brunswick said that when her son Brian sought a loan to attend Fairleigh-Dickinson University, it was advertised as having flexible repayment options.

But after her son graduated, they were told there was no income-based repayment, Carney said. It took him a year and a half to find a full-time job, and HESAA declared the loan in default. Carney said her son was forced to file bankruptcy and will make loan payments for five years through a bankruptcy trustee.

After that, the matter will still be in court, Carney said. She said that at 27, her son "can't contemplate" moving out and starting a family.

Also testifying was Cassandra Alessio, 26, of Clifton, who said she owes $110,000 in HESAA loans and $20,000 to $30,000 in federal loans. Alessio, who works in fund-raising in a political office, said her HESAA loans were originally $70,000 to $80,000, but have grown with interest.

Even though she pays about $1,000 a month, "I'm not paying anything down," she told a reporter. She asked lawmakers to imagine going to bed and worrying that "you might never be able to have a child," or marry.

Other testimony focused on HESAA's customer service, with people describing the agency's staff as unhelpful, aggressive, and insensitive.

Melissa Dammer of Voorhees said that after her son died unexpectedly in 2014 and she sent HESAA his death certificate hoping for loan forgiveness, the agency told her she should have read the fine print on his $46,000 loan. "A little compassion wouldn't hurt," she said.

After hearing their testimony and others, lawmakers with the Senate Higher Education Committee advanced a bill that would forgive student loans granted by HESAA if the borrower dies, even if there is a cosigner.

And they said they would consider doing more.

"From what I heard today, we really need something much broader," Gordon said.

Sen. Sandra Cunningham (D., Hudson) said that she and Senate Minority Leader Tom Kean Jr. (R., Union) and Sen. Teresa Ruiz (D., Essex) would introduce legislation that would require HESAA to get a court order before using certain practices — including garnishing wages and suspending occupation licenses — to collect on defaulted loans.

"This, at least, will help some people," Cunningham said. She said it was "painful to see young people who are starting their lives in the hole."

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