With the state of New Jersey facing major disruptions to everyday operations as a result of the current COVID-19 pandemic, Assemblyman Bill Moen, D-5th District, proposed a bill to freeze interest accrual on all New Jersey student loans in deferment or forbearance during the public health crisis.
In the week following Gov. Phil Murphy’s executive order closing many non-essential businesses and instructing residents to stay at home, more than 150,000 residents applied for unemployment. Even employees whose businesses remained open may still be out of a job because of personnel cuts resulting from the stock market plunge or necessary efforts to curb the spread of COVID-19.
Under the proposed bill, the Higher Education Student Assistance Authority would suspend the accrual of interest for 60 days on New Jersey college loans for borrowers who were approved for a deferment or forbearance.
Both forbearance and deferment help borrowers avoid defaulting on loans by allowing them to temporarily pause monthly payments.
Depending on the borrower’s situation, they may be eligible to delay payment of both the interest and principal amounts. However, neither option prevents interest from continuing to accrue, which is why this bill aims to ensure borrowers are not indirectly penalized for the atypical and dire circumstances preventing them from making payments.
Last year, more than one million New Jersey residents owed a total of $37.6 billion in student loan debt. As the youngest member of the Assembly – with many of his peers still paying off their college loans –33-year-old Moen has made the student debt crisis one of his main focuses since entering office in January.