In my Student Loan Power Point presentation, I label NJ Class loans as the “pits”. These loans are financed by bonds issued by the NJ HESAA. In almost all situations, a co-signer is required. Interest accrues from day one. The regulations call for a 30% collection fee. Collection efforts by the State have been very aggressive, and include administrative wage garnishments, state tax refund intercepts and litigation.
Although deferments and forbearances are allowed, there is no provision for income driven repayment plans. Since NJ Class Loan program allows loans up to the cost of attendance less other aid/loans, it is not uncommon for students and their guarantors to owe in excess of six figures especially if the student attended graduate school. Without an income driven payment alternative, students just starting work could be faced with a monthly payment that could be in excess of $1000 per month. Or their parents.
As originally constituted, the co-signer was still on the hook if the student died. However, that onerous provision was eliminated about 18 months ago.
In the late fall of 2015, the NJ Senate passed a bill to allow for income driven repayment plans for NJ Class loans. The bill languished in the Assembly and has been officially declared dead. Hopefully, with a new governor, this bill will be re- introduced.
New Jersey had a law which allowed for the suspension of professional licenses for failure to pay State and even federal loans. Many states have such laws which appear to be self defeating. How is a student going to repay a student loan if they cannot work in their chosen professional? Well, at least in this regard, New Jersey seems to have come to its senses. In July, 2017, a bill was signed into law which revoked the professional license suspension statutes. Give credit where credit is due- this is a step in the right direction.
We will keep you up to date on any new developments on NJ Class loans.
You may want to check out an excellent article on professional license suspension laws which appears at https://www.nytimes.com/2017/11/18/business/student-loans-licenses.html?mtrref=www.google.com