Thursday, March 19, 2015

Here is Something You Can Do Right Now To Change HESAA


Sign the petition for debt relief for HESAA/NJCLASS borrowers in default!



     Below you will find the text of a petition which I encourage everyone who visits this blog to sign. Written by a friend to people experiencing the depths of HESAA HELL, Deborah C. Gumpper has taken the fight to HESAA and come up with a specific demand that defaulted borrowers should be allowed access to rehabilitation loans on their way to financial health. As it is, HESAA keeps defaulted borrowers in default into perpetuity. Why not? They are a for profit company and borrowers in default have to sign over all their assets to them to make enormous punitive monthly payments. As Carney says in the petition, "I guess the real truth is that HESAA wants you default on your loans, they make more money that way."
 
     So far this egregious corporate behavior isn't against the law but it really should be -- so please sign now!

The Petition:

ATTN: Gabrielle Charette (HESAA boss)
DEMAND NJCLASS  OFFER REHABILITATION LOANS TO DEFAULTED BORROWERS: Amend N.J.A.C. 9A:10-6.18 and all other controlling statutes in which HESAA NJCLASS operates under, to grant rehabilitation loans to borrowers who have defaulted on their NJCLASS loans.



     HESAA's role as guarantor of roughly $1.6 billion in student loans and state aid to students, has completely misinformed unsuspecting borrowers that they are a profit making entity hawking high interest, subsidized loans, loans impossible to repay. NJCLASS loans is neither a federal loan nor private loan---they  magically fall in between the two.  NJCLASS fails to send consistent billing statements and ignores borrowers billing inquiries/disputes, allowing delinquency to add up so they can easily default.  A borrower’s whose loan has defaulted has no where to go; they can either negotiate with the collection attorney, who adds a collection fee ranging between 18% and 30%; they can file a Chpt. 13 Bankruptcy and stay the collection action for 5 years; or they can spend exorbitant amounts of money trying to litigate the matter in civil court only to lose.  The loan will FOREVER remain in a defaulted status until it is paid in full; which means a borrower will be well into their late 50’s by the time they pay off their NJCLASS loan. 

     N.J.A.C. 9A:10-6.18 specifically states “(c) An NJCLASS borrower may request the rehabilitation of the borrower’s defaulted NJCLASS Loan Program OR NJCLASS Consolidation Loan held by the Authority. The borrower shall make one voluntary full payment each month for 12 consecutive months to be eligible to have the defaulted loans rehabilitated.” Under section (d) it further states,   “the maximum period for a rehabilitated NJCLASS Loan Program loan or NJCLASS Consolidation Loan shall be the same as that of the [NJCLASS] loan prior to default.  A borrower who wishes to rehabilitate a loan in which a judgment has been entered must sign a new promissory note. The maximum repayment period of the new promissory note shall be the same as that of the NJCLASS Loan Program loan or NJCLASS Consolidation Loan prior to the default

     However, despite this plain language, HESAA claims they cannot rehabilitate NJCLASS loans as they are  "not authorized by either statute, or the bond indentures that fund NJCLASS loans at this time. The regulations allow for an NJCLASS rehabilitation program in the event that statute and market conditions change to allow for the issuance of bonds to finance rehabilitation."  Yet, I have found no such language requiring  a new bond issuance for rehabilitation of defaulted NJCLASS loans.  
 Yet, as above-stated, if a borrower rehabilitates their defaulted NJCLASS loans, the maximum repayment period stays the same as the original payment period.  Thus, why would a new bond need to be issued if the borrower is paying the same amount over the same time period in accordance with the original bond that funded the loan?  This makes little to no sense.  There can be no loss to the investor, nor should it raise the interest rate on the bonds. And, if the loan were to remain in a default status, unpaid, there would be a loss to the investor.  Consequently, I cannot comprehend the rationale HESAA retains when it allows loans to remain in a defaulted status.   

     I guess the real truth is that HESAA wants you default on your loans, they make more money that way.  And, the only issue HESAA worries about is their “investors.” What about the borrowers who signed on the dotted line when they were just 17 years old. This company is no more than a legal, loan sharking outfit run under the Seal of the State of New Jersey.  They need to come down from the high cloud they been floating on and adhere to the rules and regulations just like any other private loan lender. 
With your help, we can change this.  If we sit idly by, many young borrowers will face financial impotence and will not be able to move on with their lives or contribute to the economy in any meaningful way.  I am not asking for a handout; I am not asking for the loan to be forgiven; I am asking that HESAA NJCLASS give borrowers a chance in life by doing what is right.


5 comments:

  1. Update: the administrative code under which HESAA administers the NJCLASS loan provides for REHABILITATION of defaulted NJCLASS loans in Section 6.18(c), a NJCLASS borrower may request the rehabilitation of their defaulted NJCLASS Loan Program OR NJCLASS Consolidation Loan held by the Authority. The borrower shall make one voluntary full payment each month for 12 consecutive months to be eligible to have the defaulted loans rehabilitated.”

    When my son requested rehabilitation pursuant to the administrative code he was advised that HESAA does not offer rehabilitation for defaulted NJCLASS loans. In an effort to understand why the administrative code provides for rehabilitation but HESAA is refusing to offer rehabilitation, he reached out to many legislatures. One in particular DID response-Assemblyman Jack Ciattrelli, took an interest (though not long-lived) and investigated this matter with HESAA as to why they will not offer rehabilitation.The following is the information I received on HESAA's position regarding rehabilitation: "Through my inquiries, I learned that currently, NJCLASS does not offer a rehabilitation program. The regulation you cite is prospective in the event that federal law changes. Federal law, 34 C.F.R. 682.405 and 34 C.F.R. 685.211 (f) provide for rehabilitation of FEDERAL STUDENT LOANS ONLY, where the default is removed from a borrower's credit report. In order for HESAA to offer such a program for NJCLASS, there would need to be a federal statutory amendment to authorize removal of a non-federal loan default from a borrower's credit report.The National Council of Higher Education Resources, of which HESAA is a member, has included a provision for the rehabilitation of non-federal student loans in their proposal for the upcoming Reauthorization of the Higher Education Act. HESAA prospectively amended their regulations so that they could offer rehabilitation when or if the law does change. But, they currently do not offer rehabilitation because the federal law does not allow for it." HOWEVER, after consulting with two attorneys, I am advised that "The position ascribed to the National Council of Higher Education Resources is stated here: http://c.ymcdn.com/sites/www.ncher.us/resource/collection/3906FBDA-E100-4C41-B678-885A90AEF105/10_White_Paper--Private_Student_Loans_-FINAL.pdf
    The only problem NCHER recognizes is that the FCRA does not allow non-federal student loan lenders “to remove the default record when the borrower satisfies the lender’s rehabilitation standards.” It’s absolutely not a statement that federal law prohibits non-federal student loan lenders from offering rehab programs – to the contrary, it clearly recognizes that they are permitted." So, where do we go from here??? Well, it is now a letter writing campaign to the my federal congressional representative or ANYONE in the federal government who can propose an amendment to allow for non federal student loan lenders the ability to remove default when a borrower completes their rehab program. It is obvious that HESAA will do nothing until federal law changes to allow for a default to be removed despite the fact that the FCRA requires them to report the loan as it is paid...

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  2. On another note, I discovered even more information on HESAA NJCLASS loans in a document titled New Jersey Higher Education Student Assistance Authority, NJCLASS/FFELP Loan Programs, Management's Discussion and Analysis June 30, 2013. In that document, HESAA stated the following: "HESAA continually evaluates the performance of its NJCLASS loans to balance he needs of its borrower base with the necessity of maintaining an adequate collections stream on its portfolio. This effort has resulted in the recognition that current economic conditions have contributed to an increase in borrower defaults in recent years. Research performed by HESAA staff and our advisors has also determined that a large portion of loans that eventually go into default are those that originated with Option III, which allows for full deferment of principal and interest while in school, and/or those with lower credit scores....To mitigate the risk of future loan defaults and enhance the overall credit quality of its loan portfolio, the Authority made two significant policy changes. During the 2011-12 academic years, the allowable percentage of fixed rate loans that can be originated in Option III was reduced to 30% and the minimum credit score required to qualify for a NJCLASS loan was raised to 630. In 2012-13, the allowable percentage rate of fixed loans that can be originated in Option III was reduced to 15% and HESAA raised the minimum credit score required to quality for a NJCLASS loan from 630 to 670."

    So, what does this mean to ME, well, I read this as a sign that HESAA knew that those borrowers who chose Option III were doomed from the get-go. Doesn't this sound very familiar. HINT HINT-- the subprime lending crisis with adjustable rate mortgages that lenders knew the borrower could not afford when the ARM adjusted? And, in this instance, due to their knowledge of default, HESAA protected themselves by decreasing the availability of Option III loans--this is stated in writing. But, what did they do for the borrowers already in loan repayment---NOTHING!!!! Oh yeah, they defaulted them. they stated it in writing. It further appears that they knew they were setting borrowers up for a fall by allowing them to choose Option III repayment. So, my question remains, did HESAA know the full extent of high-risk lending involved with Option III loans which is leading to an epidemic of Option III loan defaults? If so, is there a case against them?

    Something to ponder....let me know your thoughts.

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  3. HESA is Helll,
    When you call in attempt to make arrangement representives hang up the phone on you. They asked you for your information, so you provided to them as as borrower who is trying to get into a plan so you can pay. But it's not their plan. They are trying to get your work information so they can garnish your pay. They hung up after retrieving your info, SO WICKED.
    They took all my income tax this year. They played me out telling I can appeal it by sending them shut off notices and letter explaining my financial situations. SUCH A JOKE! THEY THINK THAT THEY ARE GOD. This is the letter I receive from them today. Dear Student Borrower: " please be advised that the New Jersey higher education assistance Authority has reviewed your case regarding the application of your state income tax refund toward satisfaction of your current indebtedness owed the New Jersey higher education assistance authority pursuant to n.j.s.a. 54a:9-8.1 through 8.3. The Authority has determined that a set off is proper in the circumstance and has therefore determined to apply your refund to the current amount you owe the authority this is a final agency decision. Any appeal of this decision must be made to the superior court of New Jersey."

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  4. HESA is Helll,
    When you call in attempt to make arrangement representives hang up the phone on you. They asked you for your information, so you provided to them as as borrower who is trying to get into a plan so you can pay. But it's not their plan. They are trying to get your work information so they can garnish your pay. They hung up after retrieving your info, SO WICKED.
    They took all my income tax this year. They played me out telling I can appeal it by sending them shut off notices and letter explaining my financial situations. SUCH A JOKE! THEY THINK THAT THEY ARE GOD. This is the letter I receive from them today. Dear Student Borrower: " please be advised that the New Jersey higher education assistance Authority has reviewed your case regarding the application of your state income tax refund toward satisfaction of your current indebtedness owed the New Jersey higher education assistance authority pursuant to n.j.s.a. 54a:9-8.1 through 8.3. The Authority has determined that a set off is proper in the circumstance and has therefore determined to apply your refund to the current amount you owe the authority this is a final agency decision. Any appeal of this decision must be made to the superior court of New Jersey."

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  5. ive NEVER experience the worst customer service EVER! I was facing difficulty in payments I set up a payment plan finally after 1 year of calling !!! YES 1 year !! Once I finally got through I set up payments to get my loan out of default sent in all paperwork once tax time came around GONE next year same thing although I have proof that I both faxed and mailed the paperwork in certified mail ! They still argue saying they never received any paperwork smh I wish these reviews was up before I took out a loan !! I would've went else where

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