Edit Note: This post was updated on 4–26–16 with updated facts and figures. Due to continuing interest in this post, I thought it best to keep this updated with the most recent numbers, as the figures in the original post were nearly two years old and I’m not longer a recent college graduate.
My name is Robert Ruszczyk. I am currently an employee of the State of New Jersey at the Department of Labor and Workforce Development (LWD). I have been at LWD for almost 3 years and plan on working here for many future years. I am also 27, a college graduate, and have over $130,000 in outstanding student loans. While some of this is held by the Federal Government and private institutions, as of 4–26–16 $48997.23 is held by the State of New Jersey through the Higher Education Student Assistance Authority (HESAA).
My bill from HESAA every month is for $496.84. I pay $500 just to make the accounting easier. At this rate, one loan will take 153 months to repay and the other 160. That $500 is also nearly a quarter of my net pay after taxes and other deductions. The interest rates for these loans are over 7.5%, significantly higher than most current student loan interest rates. Unfortunately, HESAA does not offer any assistance in lowering payments. They do not offer refinancing to current rates, they do not offer income-based repayment, and they do not offer a public service forgiveness option. They are also not dischargeable in bankruptcy.
The NJ Class loan from HESAA is so difficult to discharge, that they even demanded payment from parental co-signers whose son died after they had furnished HESAA with a copy of the death certificate. The suggestions on the HESAA site to reduce your loan costs are, “Keep living like a student,” “Prepay your loans,” and “Pay on Time, All the Time.” These are great solutions if you are wealthy and able to make payments easily, but they are borderline insulting for those who have difficulty making payments. The consolidation option that HESAA offers merely averages the interest rates of your loans together into one loan, hardly a cost-saving measure.
With my Federal loans, if I make 120 consecutive payments (10 years’ worth) while in the employment of a public agency or select non-profits, the balance of my loan will be forgiven. I also qualified for Income-Contingent Repayment, which uses a formula to calculate my monthly payment according to my gross income at the expense of a longer loan term. Through these two programs and my employment with the LWD, I am able reduce the monthly payment by almost $40 and will save a significant amount over the life of the loan. Though $40 is not much, when you have less than $150 in discretionary income every two weeks, it does make a difference.
I did not take employment with LWD for the salary; I could have made much more in the private sector. I took employment with the State for the intangible benefits. Benefits like a pension, great health care plans, tuition reimbursement, and job security. Most of those are under threat at this current time. But even with all those issues, I still choose to work for the State. I enjoy my job. It is challenging and engaging; there is something new to learn about my position every day, and because of this, I would not want to work anywhere else.
But I wonder why is it that the Federal Government can assist me in my student loans as a reward for public service that is not even benefiting them, but the State for whom I work and pay my loans cannot? Why can’t HESAA offer Income-Based or Contingent Repayment plans? Why can’t they offer a public service forgiveness option? Why is it that I turn around every month and pay a quarter of my net pay back to the State that just paid me? It’s a devaluation of my work; work that I take pride in for the citizens of New Jersey.
While efforts to assist private student loan borrowers have so far failed at the Federal level, New Jersey can take some steps to assist those who are under an unwieldy burden taken on as youths. I would love for a statewide conversation to begin on how we can help all student loan borrowers improve their position with their loans, but that is an unlikely proposition for many. But as NJ legislators and public servants, you do hold the power to improve the standing of those who took their loans from the State. Reforming HESAA and mandating that they offer the same opportunities the Federal Government does with their student loans is not an unreasonable request, as it would encourage more young people to serve their communities and improve New Jersey.
I hope that you see the burden today’s young adults are under with student loans. This letter could be significantly longer with facts and figures on how expensive college has become and how higher education is not nearly the investment it used to be. Instead I have chosen to give you one story, mine, on why there needs to be some assistance to student loans borrowers.
I urge you and your office to make it a priority to pass legislation that will offer the same types of programs the Federal Government does to their borrowers to those who borrowed from the State of New Jersey.