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The Latest and Greatest with My NJHESAA Loan

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Ah yes… Time once again to take a quick look at my student loan for the New Jersey Higher Education Student Assistance Authority. This loan aggravates me for a variety of reasons (which I’ll state below). I am pleased to announce, though, that I’ve made somewhat significant progress in paying down this loan to a less unruly level than when my repayment began. Since I began repaying the loan, I’ve reduced the principal due by a few thousand dollars, which is pretty good considering the interest rate.

Anyway, some things about this loan just make me (and thousands of others, I’m sure) mad:

  • Interest Rate: I’m paying some 7.33% interest on my NJCLASS loan. That’s just too high of an interest rate for a borrower like me, who has an 800 credit rating. For comparison’s sake, my Direct Loan from the federal government has a 4.25% interest rate – much more acceptable.
  • No Online Payment: I’m not sure how, in the year 2009, NJHESAA does not have an online repayment option. That’s crazy. When I graduated from Rutgers with my Masters Degree I had three student loans. One of them was to CitiBank. I was able to pay back the entire CitiBank loan (which was probably $8,000+) in less than a year because of the online payment options. NJHESAA is really missing out on getting an extra $50 here or $250 there in online payments. Either that, or they’ve strategically opted to not have an online payment gateway.
  • Balance Inquiries: In a related point, the NJHESAA has no active online resources for borrowers in repayment. In other words, I can’t log-on to their website and check my balance or see my previous payment history. All of this is available with the federal government’s Direct Loans program.
  • You’re Stuck: However, one of the most aggravating parts of the NJCLASS repayment is that you’re stuck with NJHESAA. I can go out and find better repayment terms from another lender, but I would not be able to pursue the improved terms without NJHESAA approving me taking out their entire loan. Let me rephrase that so everyone understands… I can go to Bank of America and get approved for a 4.5% loan specifically to repay my NJHESAA loan. However, I cannot repay my NJHESAA loan in full by switching to Bank of America without NJHESAA’s approval to do so. Talk about dealing in a fair marketplace…

One of the things that really irks me about this loan, though, is more of a historical aggravation in that NJHESAA once reported me to the credit bureaus as having paid 30 or 60 days late…while the loan was still being deferred because I was still in school! Talk about complete insanity!? And when I called them up to complain, they said that while they agreed that the report to the credit bureaus was an error on their part, there was nothing they could do about it. This negatively affected both my credit score and my Mother’s credit score since she was a co-signer at the time. Bear in mind that both my Mom and I have never made a late payment on any account at any point in time ever. Thankfully, I’ve disputed NJHESAA’s erroneous report with all three credit bureaus and they’ve removed the late payment error.

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While the entire student loan industry needs a vast amount of reform, at this point I’d settle for a company like NJHESAA getting itself into the 21st Century with an online payment and loan balance/information portal!

Obama’s Hope on College Affordability

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President Obama gave his first address to the Congress last night and he addressed a variety of topics. The one topic that piqued my interest was his discussions about education and higher education specifically. Higher education affordability for all Americans is one of my major issues as a voter so I thought I’d offer some comments here. The text from Obama’s speech:

I know that the price of tuition is higher than ever, which is why if you are willing to volunteer in your neighborhood or give back to your community or serve your country, we will make sure that you can afford a higher education. And to encourage a renewed spirit of national service for this and future generations, I ask this Congress to send me the bipartisan legislation that bears the name of Senator Orrin Hatch as well as an American who has never stopped asking what he can do for his country – Senator Edward Kennedy.

You know – that’s a very inspiring thought and a good idea. I wonder about how realistic it is in action, though. For example, what will the cost be to the government if High School Student A volunteers X amount of hours in his or her hometown and thus meets the requirements of this program? Will the government pay all of their tuition at a public school? Half? A quarter? What is the number that makes college affordable for a student?

Further, what happens if High School Student B – who is from a better off family than Student A – does the same amount (or more) of volunteering than Student A? Since Student B is from a well-to-do family, then does he or she get anything for their community service? The same end was achieved – citizens served their community. Right?

And what happens when High School Student C needs another 50 hours of community service by the deadline date to qualify for whatever this grant money will be? Are we to believe that if Student C’s family knows people who know people that they won’t write-up false letters showing all of the service hours that Student C volunteered?

I don’t want to sound like a negative guy on this proposal, but it seems like it’s a bit too nebulous right now. I’m all for college affordability so long as 1) it is a program with no discrimination (income included), and 2) it’s fiscally responsible. We didn’t get that information last night. Other than that, I thought the President’s speech sounded more like a campaign speech than anything else, but I had no major fundamental problems with it.

The FAFSA May Be On The Way Out

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The New York Times printed an article this morning talking about how the Free Application for Federal Student Aid (FAFSA) is too cumbersome for most families to fill out. They cited how some families are even turning to paid consultants to complete the form, paying somewhere between $80 and $100 per application (which defeats the whole purpose of a free application).

Clearly, if you’ve read this blog over the years, you know that I have a long and storied history with student loans. Over the course of my 7 years as an undergraduate and graduate student I filled out a bunch of these things; my Mother and I filled out my first few FAFSA forms and I filled out the last few. What I remember about filling out the forms was not that it was tedious (filling out any government form is tedious), but rather that the results reports were not good enough.

In other words, you’d put together this FAFSA and then get a report back (mine was from my undergraduate institute) telling you which aid you qualified for based on your responses. The report didn’t speak to potential repayment scenarios or to existing debts under each program; both pieces of information could really help students and their families make better decisions. I’m not sure why this information isn’t included in the report as both the federal government and the college have the information at their fingertips.

The FAFSA should be changed, but this change should be a part of changing the entire student loan process.

It’s Important To Check Your Credit Report

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The other day I went up to Roxbury to see my Mom and brothers and while I was up there my older brother went online to get his free annual credit report from AnnualCreditReport.com (not freecreditreport.com from the commercials, which actually does NOT give you a free credit report). The last time I checked all three of my credit reports was in December 2007 so after seeing my older brother pull his reports, I thought that now was as a good a time as any to do the same. Plus, in these uncertain economic times it pays to spend a few minutes checking your credit report to ensure accuracy.

And, as always, the credit report is an interesting thing. I should note that I didn’t ask for my credit score because 1) they charge you for that and 2) when I moved into the new apartment in the summer they ran a credit score on me and it was 790 – I’ll take that number any day! However, there were two discrepancies in my credit report that needed immediate attention.

First, the New Jersey Higher Education Student Assistance Authority (NJHESAA) once reported that I paid 30 days late on one of my student loans (back in 2006). The problem, though, was that the loan was still in deferment and was not due for payment at the time. Back in 2007 when I pulled my credit reports, I noticed this problem and called NJHESAA and while they agreed that this was a mistake on their part, they also said that they couldn’t contact the credit bureaus to have it fixed. So I contacted Experian to get the mistake removed from my report and they took it off without any problems. My mistake in 2007, though, was that I didn’t ask TransUnion or Equifax to remove the discrepancy. So when I pulled up my reports the other day – guess what was sitting there staring at me on those two reports. That’s right – the NJHESAA mistake strikes again!

I sent messages to both TransUnion and Equifax and as of today, Equifax removed the problem and TransUnion is still investigating. I pulled up my Equifax credit report to confirm that they fixed the mistake and I can confirm that they, in fact, did fix the problem. They were very quick and very efficient at addressing this problem.

The second interesting thing that I found on my credit report was an open credit card account that was actually a sub-account off of one of my mother’s credit cards from many years ago. This account was only reported on two of the three credit reporting agencies. Since this account was closed and replaced with a different sub-account (not for me), I submitted disputes with the two agencies that still listed it as open. To date, both agencies are still looking into this one.

The reason for this post is to encourage you to go online and check your credit report at AnnualCreditReport.com. Even if you have excellent credit and a perfect credit history like I do, you may be surprised at what you find.

The Cost of Higher Education Continues to Skyrocket

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On Wednesday, the New York Times ran an article entitled, “College May Become Unaffordable for Most in U.S.” The author, Tamar Lewin, did an excellent job of wrapping up a multitude of issues into a concise presentation. Most of today’s junior and senior high school students (and, in some cases, their families) are facing a tough battle to finance a college education.

The economy is now officially in a recession, better compensated job prospects for parents are bleak, and the private lenders who offer student loans generally fall into one of two categories: part of the larger kickback scandal or no longer making student loans available. The federal Direct Loan service is still a viable option for most college students and college prospects. Yet as the sources of private student loan financing are drying up, the cost of a college education is increasing. Lewin writes:

Over all, the report found, published college tuition and fees increased 439 percent from 1982 to 2007, adjusted for inflation, while median family income rose 147 percent. Student borrowing has more than doubled in the last decade, and students from lower-income families, on average, get smaller grants from the colleges they attend than students from more affluent families.

That’s a scary number, huh? Tuition and fees have jumped 439% in a matter of twenty-five years while incomes have only grown by 147%. Those who research the student loan industry as well as the affordability of higher education have got to be giving a double take to those numbers. That’s frightening. More from the New York Times article:

Among the poorest families — those with incomes in the lowest 20 percent — the net cost of a year at a public university was 55 percent of median income, up from 39 percent in 1999-2000. At community colleges, long seen as a safety net, that cost was 49 percent of the poorest families’ median income last year, up from 40 percent in 1999-2000.

Even the community college option is becoming more and more out of reach for the poorest families. What incentive does an elementary school student or a high school student in a troubled school district have to achieve greater success if they can’t even afford to continue their education at the community college level?

In New Jersey, we have the New Jersey Student Tuition Assistance Reward Scholarship (NJ STARS) program. The NJ STARS program, more or less, provides a vehicle for high-achieving high school students to attend the local community college for free. If their grades are acceptable while in the program, they can receive a stipend to finish their education at a 4-year institution. It’s a good deal if you think about it. If the program existed when I was graduating high school and moving on to college, I would have jumped on it immediately. That assumes, of course, that I would have known about the program and that I had the benefit of my current hindsight.

If you have the opportunity I suggest taking a few minutes to read the article linked above. In fact, share it with any college-aged people in your family and if you live in New Jersey, be sure to bring the NJ STARS program into the discussion with your high school-aged family members.