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Trenton NJ, Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced today that the State has filed a lawsuit against Navient Corp. and Navient Solutions LLC (“Navient”) alleging the student loan servicer engaged in unconscionable commercial practices, deceptive conduct, and misrepresentations when servicing thousands of New Jersey consumers’ student loans.
COLLEEN O’DEA | FEBRUARY 10, 2017
At 9.1 percent, New Jersey’s default rate is 11th in the country, particularly good news given that students tend to carry a heavy debt burden.
Students from New Jersey’s colleges and trade schools default on their federal loans at a relatively low rate overall, although the proportion of defaults exceeds the national average at four of 10 schools.
This news comes as a package of bills designed to help New Jersey students — particularly those who borrowed through the New Jersey Higher Education Student Assistance Authority — deal with loan repayment problems and the high cost of college in general awaits further action in the Legislature.
Data from the website Student Loan Report put the state’s default rate at nearly 9.1 percent, the 11th lowest in the nation for borrowers who had to begin repayment in the 2013 fiscal year, the most recent year for which data is available because the U.S. Department of Education uses a three-year period to define defaults. Of nearly 90,000 students who borrowed money while at a New Jersey school, 8,153 were in default, defined as nine months of nonpayment.
The national default rate was 11.3 percent, a drop from 11.8 percent the previous year and the third year in a row of declines, from 14.7 percent in 2010. Nationally, more than 5.2 million borrowers entered repayment status in 2013 and nearly 600,000 of them have defaulted.
One reason for the state’s relatively low default rate could be that many students take out New Jersey College Loans to Assist State Students loans through HESAA. According to the authority’s 2015 annual report, it distributed more than $163 million for 10,686 students in and out of state that fiscal year. According to the Institute for College Access and Success, New Jersey is one of three states — the others are Texas and Minnesota — with significant state student loan programs.
BY ALAN M. COLLINGE – 05/13/16 07:00 AM EDT
When he announced his candidacy in 2007, Barack Obama looked like he could be the one to finally stand up to the student lending system. He was one of only two members on the Senate Health, Education, Labor and Pensions (HELP) committee not to have taken money from the Sallie Mae PAC. In this position he was privy to HELP Committee and other reports detailing a broad swath of illegal and deceptive activities by the lenders, the universities, and even the Department of Education.
His rhetoric about making college “affordable” sounded great. The deletion of most every standard consumer protection (like bankruptcy and statutes of limitations) from student loans had caused a hyper-inflationary market, and a systemically predatory lending system that was lives and livelihoods of millions of people. The nation’s student loan debt had skyrocketed to $450 billion, and the Department of Education had actually begun turning a profit on defaults.
So when Obama was elected, largely due to overwhelming support from young people, it was assumed that he would make things right. But he did nothing to bring back any standard consumer protections. His administration did nothing to curb the predatory collection powers of the student lending system. College prices increased faster than previously, and today the average undergraduate is now leaving school with $35,000 in debt, up from about $17,000 when Obama announced.
By the time Obama leaves office next year, the nation will have added $1 Trillion to its student debt tab.
What the Obama administration did do was great for the federal government, not the students. Obama federalized the system to where the government now profitsimmensely from both interest on loans it makes directly to students, and defaults. To say that the federal government now sits atop the most predatory lending system in our nation’s history is not an understatement.