Student debt is bad. So bad that sometimes people sadly can be driven to kill themselves over the stress that it causes.
But even the most extreme circumstances might not be enough to escape the increasing burden of student loans.
A new joint investigation by ProPublica and the New York Times shed light on one particular New Jersey state agency that routinely loans cash to students. In one case, a young man, Kevin DeOliveira, was murdered. This wasn't enough to clear the outstanding debt he owed the agency.
“Please accept our condolences on your loss,” a letter from that agency said in a letter to Marcia DeOliveira-Longinetti, the mother of the victim. “After careful consideration of the information you provided, the authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you.”
New Jersey's Higher Education Student Assistance Authority is the largest state-based loan agency in the nation. Unlike even the worst of the private lenders, HESAA has the muscle of the government behind it. If it deems it necessary to collect it can withhold wages, revoke professional licenses, withhold income tax returns, and other things—all without so much as asking a court for permission.
The agency regularly sues people to shake them down for funds they often just don't have. Troublingly, the fees collected from these operations cover a full half of the agency's operating budget, documents show.
The New Jersey program has long been entangled in questionable practices. In 2010, the state's Inspectors General found that the agency was in "disarray," and that it didn't even have an internal auditor. Two years earlier, the agency was put under the watch of an independent monitor after the state attorney's general found that it was using "problematic" lending practices. A kickback scheme was uncovered that same year.
Compared to other state agencies, New Jersey's is in a class of its own. Consider this, from the ProPublica/Times investigation:
Massachusetts, running the next-largest program, with $1.3 billion in outstanding loans, automatically cancels debt if a borrower dies or becomes disabled, something many other states also do…New Jersey, meanwhile, encourages students to buy life insurance in case they die to help co-signers repay. As an agency pamphlet cautions, “Are you prepared for the unthinkable?”
The agency's spokesperson said that cases of deceased borrowers are considered on a case-by-case basis, and that it tries to be compassionate, but that “we must also meet our fiduciary duty to our bondholders.”
The ProPublica/Times investigation comes at an interesting point in the 2016 election cycle. Democratic frontrunner Hillary Clinton has made student loan reform a major part of her pitch to voters. Incentivizing state loaners to cut their interest rates by offering them federal grants is a core part of Clinton's plan.
Meanwhile, New Jersey Governor Chris Christie is reportedly being vetted as a Vice President for presumptive Republican nominee Donald Trump. Christie's office did not return requests for comment about the investigation.
Daniel Rivero is a producer/reporter for Fusion who focuses on police and justice issues. He also skateboards, does a bunch of arts related things on his off time, and likes Cuban coffee.