Assembly Democratic Measures Addressing College Student Debt Crisis Signed into Law

Assembly Democratic Measures Addressing

College Student Debt Crisis Signed into Law

Laws Sponsored by Caputo, Jasey, Schaer and Benson


(TRENTON) – Taking steps to help college students facing crippling debt, Governor Phil Murphy today signed two bills into law that will help student loan borrowers pay off their debts.

The first law (A-4623), sponsored by Assembly Democrats Ralph Caputo, Mila Jasey and Gary Schaer, will establish a process for the Higher Education Student Assistance Authority (HESAA) to declare a loan under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program as in default or rehabilitated.

“The average student in New Jersey graduates college with over $30,000 in debt. It can take years for graduates to fully pay off their debt, which can haunt them as they try to navigate the expenses of adulthood,” said Caputo (D-Essex). “NJCLASS borrowers currently lack a path to loan rehabilitation if they struggle to make payments; this bill will correct that problem and set up a system for them to make manageable on-time payments and reduce their debt.”

“It’s all too common for students to leave college with crushing debt and earn a low-paying salary at an entry-level job,” said Jasey (D-Essex, Morris). “It’s quite easy to fall behind on payments in this situation, oftentimes resulting in a loan declared in default, which can negatively impact a graduate’s credit for many years. It’s imperative that we create a process for NJCLASS borrowers to have a default loan rehabilitated so they can focus on building their lives and careers instead of overwhelming debt.”

“College graduates are facing the largest debt burden in history and as a State it is our responsibility to ensure that they are set up for success,” said Schaer (D-Bergen, Passaic). “Students who default on their loans are often caught in a cycle of poor credit history and unemployment.  This law creates a process for borrowers to restore their loans from a default status by allowing them to make payments over several months to HESAA.  Removing the default status will give graduates a second chance and an opportunity to build a better future for themselves and their families.”

The second law (A-4475), sponsored by Schaer, Jasey and Assemblyman Dan Benson, will direct HESAA to establish a Repayment Assistance Program for new loans originated under the standard NJCLASS loan program beginning with the 2017-2018 academic year to assist borrowers facing economic hardship. Under the program, eligible borrowers will pay a reduced monthly loan payment equal to 10 percent of the total of the aggregate household income of all parties to loan that exceeds 150 percent of federal poverty guidelines, with a minimum monthly payment of $5. Borrowers are eligible to participate for up to two years.

“A college degree is an essential tool to overcoming economic challenges,” said Benson (D-Mercer, Middlesex). “However, the student must be able to afford college in the first place. Establishing a pathway for students from disadvantaged backgrounds to repay their loans in a fair, manageable way will improve access to college and expand their career opportunities.”

For students continuing to face economic hardship after two years, the law will establish a Household Income Affordable Repayment Plan for new loans originated under the standard NJCLASS loan program beginning with the 2018-2019 school year. Similar to the Repayment Assistance program, borrowers would make reduced loan payments, this time on scale equal to 15 percent of the total of the aggregate household income. The minimum monthly payment would be $25.

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