It’s a difficult time to be a student. Getting finances for higher education is a mountain of enormous debt, varying interest rates, and dangers of default. Some try to improve their chances by using private or state based lenders to increase the loan amount they receive, but that creates problems of its own.

New Jersey has become a hotbed for financial turmoil regarding these loans. Currently home to the largest state based loan program in the United States, numerous problems have occurred because of private lenders. This is made worse from a lack of transparency about possible relief and repayment options.

HESAA – the Higher Education Student Assistance Authority – were instructed not to inform graduates or families about financial relief unless asked. Essentially, many students using New Jersey loan programs did so with a cosigner, meaning both signing the loan were responsible for repaying the loan amount. However, if the cosigner passed away or face some other financial issues, it was possible to seek different repayment options. Unfortunately, many were completely unaware the option even existed.

Emails from May 2016 informed employees of HESAA not to disclose information about relief, only when they were asked. Even then, callers would have to ask the right kinds of questions. When asked about the emails, Marcia Karrow, the head chief of staff, simply remarked the information did not represent the company’s values.

These problems only increased following Hurricane Sandy from November 2012. Much of the state was left in financial ruin. Businesses reported $8 billion in total damage, 100,000 workers had to file for unemployment, and approximately 80,000 homes were destroyed. This included many graduates and student hopefuls who used state sponsored lending programs. From there, even faced with tremendous financial difficulty, little relief was available, even for those who contacted HESAA frequently.

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The private lenders in New Jersey are able to apply severe penalties to those in default, regardless of their situation. This is mainly because their policies are backed by the state, and do not require court approval. Among the actions they can take, lenders can garnish wages, revoke certifications, block state income tax refunds, and even take lottery winnings. Since organizations like HESAA do not disclose critical information to debtors, these policies are frequently employed and present numerous issues for graduates.

Marcia Karrow has stated that most borrowers are happy with the current system and have few problems paying back their loan amounts.

If anything, this presents evidence of why borrowing from private lenders can be incredibly risky. They typically have few options for repayment. In the case of New Jersey, they do not have income-driven repayment options and can act with total approval from the state, regardless of a graduate or student’s financial situation. As demonstrated, options for relief are also not transparent and only available to those who understand how to ask the right questions.

There are not current policies in place that will change the system in New Jersey. The best advice offered to students is to take loans from Federal lenders, who offer greater flexibility when time for repayment comes. Once you enter repayment, then you could consider switching to a private lender via private student loan consolidation.