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Sallie Mae draws ire of students paying back heavy loans

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The student loan giant Sallie Mae generated the most New Jersey complaints about student loans from private, nongovernment lenders, according to an analysis of complaints filed with the federal Consumer Financial Protection Bureau from students in New Jersey.

The study by NJPIRG said student loan borrowers in New Jersey carry $25,700 on average in total student loan debt, compared to a national average of $24,803.

Jen Coleman, of the NJPIRG law and policy center, said thousands of students are using the CFPB's public consumer complaints database to settle disputes about private student loans. According to the NJPIRG report, Sallie Mae generated 81 complaints from students in New Jersey.

Armando Ayala, of Teaneck, a senior at The College of New Jersey, said when using the Sallie Mae online application, it was difficult to make changes and hard to find the option for a fixed-rate loan.

State Sen. Sandra Cunningham (D-Jersey City), chair of the Senate Higher Education Committee, said she is considering holding a hearing on the issue.

"It is a little disheartening that it seems so many of our college-bound students, or want to be college students, through either misrepresentation or just not having enough information, find themselves in a situation where they are getting loans and having difficulty repaying them," she said. "I think it is worth talking about how we can make this whole process better."

After Sallie Mae, the New Jersey Higher Education Student Assistance Authority generated the most complaints. Borrowers complained about problems with repaying their loans, along with fees, billing, deferment, forbearance, fraud and credit reporting.

State Sen. Robert Singer (R-Lakewood), a member of the Senate Higher Education Committee, said, "We see young people racking up tremendous debt." If they can't find jobs after graduation, they often go back to school and take on even more debt, he said.

"They are not understanding what they are signing up for, they don't understand how the payback period works, and we are going to find a lot of people in a lot of trouble," Singer said.

Jean Rash, university director of financial aid for Rutgers, said student debt is an increasing concern because higher education costs are increasing while federal and state aid programs not.

"Students and their families are turning to private borrowing as a way to finance their education," she said. Rutgers, she said, often doesn't have the chance to "counsel the student about what they are borrowing and steer them in a direction that could lower the amount they are borrowing through private lenders."

"The biggest problem is students are unsophisticated borrowers who leave (college) with debt, and they don't understand their responsibility," she said. "They don't know how to ask for deferment and forbearance, and they wind up confused."

"We do our best to advise student not to borrow at all, and look at other things to keep the costs down. We may suggest that they commute from home or do two years a community college" if they are not well positioned to take on big student loan debts, she said.

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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