Essex County Accountants Say Student Debt Is Financial Crisis – Verona, NJ Patch

ESSEX COUNTY, NJ — Student loan debt is causing headaches across the nation, including New Jersey. And it’s causing many people to put off crucial life events such as buying homes, getting married or having kids, an Essex County-based CPA group says.

Currently, there is about $1.6 trillion in student loan debt across the U.S. It’s a problem that’s reached crisis proportions, according to the New Jersey Society of Certified Public Accountants (NJCPA) in Roseland, which has more than 14,500 members.

The NJCPA said that Garden State residents realize a growing shadow is looming for those leaving college.

In June, the NJCPA polled 623 certified public accountants about student debt’s effect on their clients. More than 75 percent considered student loan debt in New Jersey to be a “major problem,” the group said.

Poll respondents said their clients have put off major life decisions and purchases due to their high student loan debt. This includes:

  • Of the nearly 270 respondents who said they knew someone who delayed this kind of decision or purchase, 80 percent said they put off buying a home and an almost equal number said they chose not to save for retirement
  • More than 65 percent put off saving for emergencies
  • 42 percent put off getting married and 39 percent delayed having children

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“The poll is a telling sign that student loan debt is a major problem,” said Ralph Albert Thomas, CEO and executive director at the NJCPA.

“New Jersey’s legislature needs to recognize this and welcome programs and initiatives to shrink student loan debt, particularly if they want young professionals to remain in the state,” Thomas said.

Here are some ways to attack the problem, according to the NJCPA’s members:

  • Limit tuition percentage annual increases for any institution for which students use student loans to attend
  • Have banks lower interest rates to college assistance programs
  • Promote trade schools instead of regular college attendance
  • Encourage private companies to offer employees bonuses to pay their student loan obligations via federal or state tax deductions

In addition, some of the poll’s respondents suggested that banks should implement having loan payments at no more 5 percent of discretionary income, and for the IRS to provide tax deductions for interest payments more than they allow now — currently student loan debt can be deducted up to $2,500 of the interest paid in the past year.

Some of the group’s members also recommended that New Jersey allow a tax deduction for student loan interest paid and remove the cap on deducting student loan interest.

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