Student Loan Protections In New Jersey
Student loan servicers are required to be licensed and regulated by the New Jersey Department of Banking and Insurance under a law signed in 2019. The law also protects student loan borrowers against deceptive practices by student loan servicers and provides assistance for borrowers who have concerns about their student loans.
The law creates a Student Loan Ombudsman within the Department of Banking and Insurance to help student loan borrowers with questions or complaints about their student loans that they have not been able to resolve with their student loan servicer. The Student Loan Ombudsman will help student loan borrowers understand their rights and responsibilities under the terms of their student loans.
Under the law, student loan servicers are prohibited from directly or indirectly employing fraudulent or misleading practices that can have harmful financial repercussions for student loan borrowers. These deceptive practices include, but are not limited to the following:
- Misrepresenting the amount, nature or terms of any fee or payment due or claimed to be due on a student loan, the terms and conditions of the loan agreement or the borrower's obligations under the loan;
- Misapplying student education loan payments to the outstanding balance of a student loan; or refusing to communicate with an authorized representative of the student loan borrower who provides a written authorization signed by the student loan borrower.
- Providing inaccurate information to a credit bureau, thereby harming a student loan borrower's creditworthiness.
For the full list of practices prohibited under the Act, click here.
To ensure accountability, the law requires student loan servicers to respond to consumer complaints submitted to the servicer by the Department within 15 business days, unless an extension request, along with an explanation on why additional time is needed, is submitted to the Department.
The Commissioner of the Department of Banking and Insurance may suspend, revoke or refuse to renew a license issued to a student loan servicer if it finds the company has violated any provision of the Act or any regulation made pursuant to the Act; or any fact or condition exists that, if it had existed at the time of the original application for the license, it would have warranted a denial. Any student loan servicer who violates any provision of the law will be liable, in a civil action brought by the Commissioner in a court of competent jurisdiction, for a penalty of not more than $10,000 for the first violation, and $20,000 for the second and each subsequent offense.
Student LoanComplaint Notice:
The Department of Banking and Insurance pursues complaints against student loan servicers, either federal or private. Servicer issues can include the following: crediting principal and interest payments, falling behind on payments, misapplied payments, interest rate calculations, requesting a new repayment plan, servicer changes, and loan consolidation.
How do I submit a complaint?
If you fall behind on your student loan payments or experience issues such as those listed above, refer to the following steps:
- Attempt to resolve the dispute by directly contacting the student loan servicer. If your issues relate to choosing a new repayment plan or consolidation questions, you may need to state the exact plan that you want to the Customer Service Representative. You may also need to request that your casebe escalated to a supervisor or manager.
- Once you are working with a student loan servicer supervisor or manager, evaluate whether your issue is being resolved in a timely manner. If it is not, send your questions in writing to the servicer’s headquarters by certified mail. Give the company a specific time to respond to you.
- If your servicer does not respond to you in a timely manner, you may also follow up with the student loan servicer’s ombudsman program, if available.
- If your issue is still not resolved with the student loan servicer, or their ombudsman, or if you believe they are not being truthful about your options, or are being unresponsive, you may file a complaint with the Department of Banking and Insurance by calling 1-800-446-7467 or using theOnline Consumer Assistance Form.
- You can also determine if the student loan servicer is licensed by the Department of Banking and Insurance usingNationwide Multistate Loan Servicing (NMLS)Consumer Access.This website that allows the public to view information concerning the student loan servicer to resolve your dispute.
- If the student loan servicer is not listed as licensed in New Jersey in NMLS,the Department of Banking and Insurance also pursues complaints againstunlicensed companies that are conducting student loan servicing activities for New Jersey residents.
Online Consumer Assistance Form
Note: In addition to the Department of Banking and Insurance, the Consumer Financial Protection Bureau (CFPB) pursues complaints against student loan servicers. You may alsosubmit your complaint with the CFPB onlineor by calling the CFPB at855-411-2372.
The CFPBPrivate Education Loan Ombudsman was created to assist private student loan borrowers. You may file a private student loan complaint using the online CFPB complaint form.
Consumer Financial Protection Bureau
PO Box 27170
Washington, DC 20038
Federal Direct Student Loans
Federal Direct Student Loans are low-interest loans for students to help pay for the cost of their education after high school. Prior to 2010, the Federal Family Education Loan (FFEL) program also offered similar student loans, sometimes referred to as federal Stafford Loans.
Federal Subsidized Direct Student Loans
These loans are for students with demonstrated financial need, as determined by federal regulations. Interest is paid by the federal government while a student is in school at least half time, during the six-month grace period and during deferment periods (a period during which a borrower, who meets certain criteria, may temporarily suspend loan payments).
Federal Unsubsidized Direct Student Loans
These loans are not based on financial need; interest is charged during all periods, including while the student is in school and during grace and deferment periods. Your school will tell you how much you may borrow and the amount of Federal Direct Loans you are eligible to receive.
There are loan limits based upon your year of attendance and aggregate limits also apply. For dependent undergraduate students, the annual loan limits are as follows:
|Third Year and Beyond
The school’s financial aid office will provide you with instructions and guidance about applying for federal student loans. Some schools may want you to apply through their own website and some schools may direct you to the U.S. Department of Education’s website.
State Supplemental Loan Program
The New Jersey Higher Education Student Assistance Authority (HESAA) offers supplemental loans to New Jersey residents attending an approved school (in or out-of-state), and out-of-state residents enrolled in an approved NJ-based school.
Federal Supplemental Education Loans
Parents of dependent students may apply for a Parent Loan for Undergraduate Students (PLUS) Loan to help pay their child’s education expenses as long as certain eligibility requirements are met. Graduate and professional students may apply for PLUS Loans for their own expenses. The parent borrower must be the student’s biological or adoptive parent. In some cases, the student’s stepparent may be eligible.
Private Supplemental Education Loans
Private lenders can also provide supplemental funding when grants and scholarships and Federal Direct loans do not fully cover the net costs of college. Such supplemental education loans are an alternative to the Federal Parent PLUS program. These loans are credit based, offered by banks, other financial institutions, State agencies, and schools.
Note: Before borrowing student loans to pay for college, be sure to apply for all the grants, scholarships, and other financial aid that you can — unlike loans, you will not have to pay back these forms of financial aid. You must complete several important steps and meet key deadlines to apply for financial aid. The first step starts with the Free Application for Federal Student Aid (FAFSA), which is the only way to determine if a student is eligible for federal aid. The FAFSA is also used to determine if you are eligible for New Jersey’s state-funded financial aid. Plus, many institutions use it to determine eligibility for institutional aid such as tuition discounts or scholarships offered by the college or university. The FAFSA is now available through an online application.
Important Information on Student Loans, NJ Department of Banking and Insurance
The Consumer Financial Protection Bureau, Student Loanswebpage
Federal Student Aid, US Department of Education
Higher Education Student Assistance Authority (HESAA)
Student loan servicers may find additional information regarding licensing by the New Jersey Department of Banking and Insurance here: https://www.state.nj.us/dobi/bulletins/blt20_31.pdf
As an expert in consumer protection and personal finance, I have an in-depth understanding of the intricacies surrounding student loans, particularly in the context of New Jersey. My knowledge extends to the regulatory landscape, the rights and responsibilities of student loan borrowers, and the mechanisms in place to protect consumers from deceptive practices by student loan servicers.
The article discusses Student Loan Protections in New Jersey, highlighting a law enacted in 2019 that mandates student loan servicers to be licensed and regulated by the New Jersey Department of Banking and Insurance. The law aims to safeguard student loan borrowers from deceptive practices and provides assistance for those facing concerns about their student loans.
Key Concepts Discussed:
Licensing and Regulation: Student loan servicers in New Jersey are required to be licensed and regulated by the Department of Banking and Insurance, ensuring accountability and compliance with the law.
Deceptive Practices: The law prohibits student loan servicers from engaging in fraudulent or misleading practices that could have adverse financial consequences for borrowers. This includes misrepresenting fees, misapplying payments, and providing inaccurate information to credit bureaus.
Student Loan Ombudsman: A Student Loan Ombudsman is established within the Department of Banking and Insurance to assist borrowers with questions or complaints that they haven't been able to resolve with their servicer. The Ombudsman helps borrowers understand their rights and responsibilities.
Accountability Measures: Student loan servicers must respond to consumer complaints within 15 business days. The Commissioner may take actions such as suspending, revoking, or refusing to renew a license if violations are found.
Penalties for Violations: Student loan servicers violating the law may face civil penalties, with the first violation incurring up to $10,000 and subsequent offenses up to $20,000.
The article also provides guidance on how to file a student loan complaint, urging borrowers to attempt resolution with their servicer, escalate issues if necessary, and, if still unsatisfied, file a complaint with the Department of Banking and Insurance.
Furthermore, the article introduces different types of student loans, including Federal Direct Student Loans (both subsidized and unsubsidized), State Supplemental Loan Programs, Federal Supplemental Education Loans, and Private Supplemental Education Loans. It emphasizes the importance of exploring grants and scholarships before resorting to loans and outlines steps for applying for financial aid.
Lastly, the article provides links to additional resources, including the Department of Banking and Insurance, the Consumer Financial Protection Bureau, Federal Student Aid, and the Higher Education Student Assistance Authority (HESAA).
For those interested in New Jersey student loan servicer licensing information, a link to the relevant bulletin is provided for further reference.