N.J. Forces Mom to Pay Son's Student Loans: Murder 'Does Not Meet Threshold for Loan Forgiveness'

[haele]

81. Hmm, so New Jersey transferred some of the federal student loans into state student loans...

then added a "we just happen to have some life insurance here you should by with that loan because you don't want to be stuck with them if something - occurs - and your kid can't go to college no more" to their new state student loan package.

Sounds as if the young man had to apply for the federal "Direct Plus" loan program because he was going to an out of state university, which racks up a ton of fees if you don't have sufficient scholarships and grants. Under subsidized and unsubsidized Perkins loans the student can be solely responsible and the loan discharged for death, disability, or service waivers (doctor or teacher in a poor community, military service, etc...), but if s/he needs to also apply for a federal Direct Plus loan (because it's going to cost over $5K per semester after all grants and scholarships can be applied), and the student doesn't have an income and is under 24, the parents or guardians are requiredto co-sign the loan.
In this case, that loan might have been the difference between Jr. College and the University of Vermont to that young man.

Normally, the Feds also administer the Direct Plus loans. Here, even though the article was a bit confusing, it looks as thought New Jersey might have taken the program over as a favor to the Feds. And were looking at ways to make some extra money - loan insurance for death and disability is not normally offered.

Haele