Son’s Murder Does Not Absolve Mother of Co-Signing Responsibility on Son’s Student Loans

Her son’s murder does not absolve a mother of her co-signing responsibility to repay the son’s student loans, according to a New Jersey student loan agency.

“Please accept our condolences on your loss,” a letter from that agency, the Higher Education Student Assistance Authority, said. “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 issue was brought to light in an article on Sunday in The New York Times. The woman has made 18 monthly payments of $180 since her request to have the loans forgiven was denied. She has 92 more to go.

The article in the Times brought to light a number of instances where the loan agency, which is owed nearly $2 billion, has become more aggressive in going after borrowers who can not repay their loans. The agency, which filed 100 lawsuits against individuals six years ago, filed 1,600 last year.

Another individual, who was diagnosed with cancer and lost his job, also had his request for loan deferral denied and was subsequently sued for more than $260,000 by the agency.

One potential reason why the agency is getting more aggressive is to satisfy investors. To raise money so it can make student loans, the agency issues bonds, which are purchased by investors. Those bonds come with certain performance guarantees and the agency can not afford many losses in order to meet those guarantees.

New Jersey’s student  lending program is considered to be among the most onerous in the nation. Payments from individuals can not be adjusted based on their income and even unemployment or health reasons are not enough to generate a deferral.

The loans also carry higher interest rates than similar federal programs. Most significant, New Jersey’s loans come with a cudgel that even the most predatory for-profit players cannot wield: the power of the state. New Jersey can garnish wages, rescind state income tax refunds, revoke professional licenses, even take away lottery winnings – all without having to get court approval.



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