’Til Death Do You Part, Except Not From Your Student Loans

Even if you rest in peace, your family pays in perpetuity

It’s bad enough to lose a son. It’s even worse to have to keep paying off his student loans after his murder.

Alternet reports that, at least in the state of New Jersey, murder “does not meet the threshold for student loan forgiveness,” so a bereaved mom is now stuck writing monthly checks on behalf of her deceased 23-year-old. The story, which originated in the New York Times, makes clear that, though Marcia DeOliveira-Longinetti’s situation is especially dramatic, it’s not unique. New Jersey’s “loans have unraveled lives.”

“Please accept our condolences on your loss,” a letter from that agency, the Higher Education Student Assistance Authority, said. “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.”

Ms. DeOliveira-Longinetti, who co-signed on the loans, was shocked and confused. But her experience with the authority, which runs by far the largest state-based student loan program in the country, is hardly an isolated one. …

One reason for the aggressive tactics is that the state depends on Wall Street investors to finance student loans through tax-exempt bonds and needs to satisfy those investors by keeping losses to a minimum.

Loan revenues also cover about half of the agency’s administrative budget.

Ew.

As Alternet points out, there are other ways to handle such things: “While states like Massachusetts — among others — automatically cancel debt if a borrower dies or becomes disabled, New Jersey has chosen a different path, encouraging students to buy life insurance to cover their debt and take co-signers off the hook in the event of a tragedy.”

Lessons!

1. Do not cosign your kid’s loans unless you’re prepared to keep paying them even after his untimely death.
2. Do not take out loans from, or probably even in, New Jersey.

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