[First Reprint]

ASSEMBLY, No. 4084







Sponsored by:

Assemblyman  GARY S. SCHAER

District 36 (Bergen and Passaic)

Assemblywoman  MILA M. JASEY

District 27 (Essex and Morris)

Assemblyman  DANIEL R. BENSON

District 14 (Mercer and Middlesex)

Assemblyman  RAJ MUKHERJI

District 33 (Hudson)


Co-Sponsored by:

Assemblymen Giblin, Zwicker, Assemblywomen Vainieri Huttle, Muoio, Assemblyman Mazzeo, Assemblywomen Jimenez, Lampitt, Assemblymen McKeon, Holley, Assemblywoman Pinkin, Assemblymen Johnson, Eustace, Caputo, Danielsen and Chiaravalloti






     Requires Higher Education Student Assistance Authority to establish income-driven repayment option and loan rehabilitation program for borrowers under New Jersey College Loans to Assist State Students (NJCLASS) Loan Program.



     As reported by the Assembly Higher Education Committee on October 27, 2016, with amendments.


An Act concerning the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program and supplementing chapter 71C of Title 18A of the New Jersey Statutes.


     Be It Enacted by the Senate and General Assembly of the State of New Jersey:


     1.    The Higher Education Student Assistance Authority shall establish an income-driven repayment option for an NJCLASS Loan Program loan.  The income-driven repayment option shall:

     a.     limit a borrower’s monthly payment amount to no more than 10 percent of discretionary income;

     b.    discharge any remaining debt after 20 years of payments; and

     c.     provide $0 monthly payments for borrowers with incomes at or below 150 percent of the federal poverty guideline for their family size.


     2.    a.  The Higher Education Student Assistance Authority shall establish a loan rehabilitation program for NJCLASS Loan Program loans for the purpose of rehabilitating a defaulted loan and removing the loan from default status.  The authority shall notify borrowers of the availability of the loan rehabilitation program.

     b.    A borrower may request rehabilitation of a defaulted NJCLASS Loan Program loan.  In order to be eligible for rehabilitation of the loan, the borrower shall voluntarily make at least nine of the 10 payments required under a monthly loan rehabilitation repayment agreement entered into with the authority.  1The payment under the rehabilitation repayment agreement shall be a reasonable and affordable payment amount.  The authority shall determine the borrower’s reasonable and affordable payment amount to be an amount equal to 15 percent of the borrower’s discretionary income.  The borrower shall provide the authority with documentation to confirm the borrower’s discretionary income.  The borrower may appeal the payment amount determined by the authority and shall submit supporting documentation to substantiate the appeal.1

     Each payment shall:

     (1)   be made voluntarily;

     (2)   be for the full amount required under the rehabilitation repayment agreement; and

     (3)   be received within 20 days of the due date for the payment.

     All nine payments shall be received within the 10-month period that begins with the month in which the first required due date falls and ends with the ninth consecutive calendar month following that month.  Once the loan has successfully been rehabilitated, 1[the remaining balance shall be repaid within the original time frame and according to the original terms and conditions of the promissory note, except that with proper documentation of financial hardship the borrower may negotiate with the authority a lower monthly payment or a longer repayment term] the authority shall permit the borrower to choose any current repayment plan for an NJCLASS Loan Program loan1.

     c.     Within 30 days of the successful completion of the loan rehabilitation repayment agreement, the authority shall 1remove the loan from default status and1 notify national credit bureaus to which the authority had reported the loan default, that the loan is no longer in default status 1and is paid on time or paid as agreed1.

     d.    A defaulted loan may be rehabilitated only once.  A borrower may not rehabilitate the loan again if the loan returns to default status following the rehabilitation.

     e.     1If a borrower’s NJCLASS Loan Program loan is being collected by wage garnishment while the borrower is also making monthly payments on the same loan under a loan rehabilitation repayment agreement, the authority shall continue to collect the loan by wage garnishment until the borrower makes five monthly payments under the loan rehabilitation repayment agreement.  After the borrower makes the fifth monthly payment, the authority shall suspend the wage garnishment order issued to the borrower’s employer, unless otherwise directed by the borrower.

     f.1 As used in this section, “voluntary payments” are those made directly by the borrower and do not include payments obtained by income tax offset, garnishment, or income or asset execution.


     3.    The Higher Education Student Assistance Authority shall promulgate regulations pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), necessary to effectuate the provisions of this act 1, including a definition of discretionary income for the purpose of the income-driven repayment option and the loan rehabilitation program based on federal guidelines for federal student loans1.


     4.    This act shall take effect on the first day of the sixth month following enactment.