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Making College Affordable and Taking on Student Debt

This is a special issue for Amy as she understands personally the cost of education.  Every month she sends a check to pay back her remaining student loans which are more than triple the national average.  Most “politicians” won’t tell you what they paid for their education.  Amy paid for college on her own, through work, grants, scholarships, and loans.  She worked hard and completed a B.A. degree in History from Florida State University, then went on to complete a Master’s degree in History.  She was then accepted to several law schools and could not afford to attend many of them. She completed her J.D. degree at Rutgers School of Law Camden, which ended up being one of the best decisions she ever made. However, she graduated with what many would describe as crippling debt.  Over the past 14 years she has worked hard to build her small business and support her family.  Throughout, she has paid off several of her loans, but the two larger loans remain.  

While many people talk about free college education, very few people are doing anything to solve the problems faced both by students who are trying to finance education and those paying for it after graduation.  Amy has a plan.

The current NJ loan system needs to be completely overhauled.  The NJ CLASS (College Loans to Assist State Students) has drawn national scrutiny for its high costs, predatory loan repayment standards, and aggressive collection tactics.  At the federal level we simply cannot count on the current administration to provide relief.  At the state level, we can set an example for the rest of the country.  The State of NJ can provide for low or no interest student loans or compel lenders to do so.  These loans would be paid back at a rate of no more than 10% of the borrowers’ income and any remaining debt would be forgiven after 20 years.  After a few years, the program would become self-funding in that the payments coming in on the loans would cover the cost of loans outgoing.  Government and banks need to stop being in the business of making money off of college education.

After applying all federal aid, students should be able to finance 100% of their educational costs if they maintain a “B” average through the State loan program.  Payments on the State loans would be made via payroll deduction.
What many people do not realize is that Student Loan debt is non-dischargeable in Bankruptcy.  This means that even if you do not pay the debt is never goes away.  This can be crippling for some. If you cannot afford to pay the debt it affects your credit, your ability to purchase a car, a home, etc. Many employers will do a credit check prior to hiring an employee.  Non-payment of student loans can cost a person a job. 

Currently, borrowers cannot deduct any student loan interest payments on their State tax returns.  Many of these borrowers, like Amy, have paid back all of their State student loans and are only paying on Federal Student loans.  The tax revenue implications of allowing the deduction is minimal to the state.  However, that money can go right back into our economy.  Making student loan interest payments tax deductible puts money back into the hands of the working class families that are the backbone of this state.

We also need to provide free four year tuition to all high school graduates in the top 10% of their class.  The NJ Stars (I and II) programs do not go far
enough.  These programs still require students to apply for and accept federal aid first.  We need to simply cover the cost of tuition outright for these students, many of whom are still going to need to finance books, room and board, and/or travel to and from school.  We need our students to focus on education not on funding it.

Amy wants to make a college education a reality for all, but not with handouts.  There is an inherent value toward working hard and being responsible for the cost of your education.  However, we also need to ensure that the engineers, teachers, lawyers, doctors, scientists, and leaders of tomorrow are given the opportunity to attain their education.

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