LEGISLATIVE FISCAL ESTIMATE

SENATE, No. 1148

STATE OF NEW JERSEY

218th LEGISLATURE

 

DATED: MARCH 9, 2018

 

 

SUMMARY

 

Synopsis:

Requires Higher Education Student Assistance Authority to establish repayment assistance program for borrowers under New Jersey College Loans to Assist Students Loan Program who suffer material loss of income.

Type of Impact:

Indeterminate Expenditure Increase

Agencies Affected:

Higher Education Student Assistance Authority

 

Office of Legislative Services Estimate

Fiscal Impact

Annual

 

Cost to HESAA

Indeterminate Increase -  See Comments Below

 

 

 

 

·         The Office of Legislative Services (OLS) notes that Senate Bill No. 1148 of 2018 would result in an annual cost increase for the Higher Education Student Assistance Authority (HESAA).  Under the bill, HESAA would incur additional costs by making interest payments for a New Jersey College Loans to Assist State Students (NJCLASS) borrower who is accepted into the repayment assistance program.  The additional cost is indeterminate, as the OLS does not have data necessary to project the number of borrowers who might participate in the program, the outstanding principal of their loans, and the interest rates applied to those loans.

·         The OLS notes that HESAA has established a similar repayment assistance program for NJCLASS loans applied for or used on or after certain dates.  This bill expands borrowers’ eligibility for the repayment assistance program by: 1) including borrowers irrespective of when the loan was issued; and 2) allowing borrowers who were adjudicated a bankrupt to participate in the program.

 

BILL DESCRIPTION

 

      This bill requires that the HESAA establish a repayment assistance program under the NJCLASS Loan Program.  Under the repayment assistance program, a borrower who has demonstrated a material loss of income would have the loan payment reduced to 10 percent of disposable income over 150 percent of the federal poverty threshold.  A borrower would be eligible to remain in the repayment assistance program for two years, during which HESAA would pay the interest that accrues, and any payment made by the borrower would be applied to the principal.  At the end of the borrower’s participation in the repayment assistance program, the monthly payment would be recalculated based on the remaining principal balance.

 

 

FISCAL ANALYSIS

 

EXECUTIVE BRANCH

 

      None received.

 

 

OFFICE OF LEGISLATIVE SERVICES

 

      The OLS notes that this bill would lead to an indeterminate increase in costs incurred by HESAA in the form of the interest payments that HESAA would make on behalf of borrowers while they participate in the repayment assistance program.  The OLS does not have data necessary, such as the potential number of borrowers who would enter the repayment assistance program, the outstanding principal of their loans, and the interest rates applied to those loans, to estimate the bill’s costs. 

      The OLS notes that HESAA has established a similar program that is available to NJCLASS loans with applications that were received on or after June 1, 2017 or loans applied for prior to that date, but used for academic terms beginning on or after August 1,  2017.  Additionally, under the existing program, a borrower who files for bankruptcy would be returned to a standard repayment plan in accordance with the promissory note.  The bill would increase HESAA’s costs relative to the current program by: 1) including borrowers irrespective of when the loan application was received; and 2) allowing borrowers who were adjudicated a bankrupt to participate in the program.

 

 

Section:

Education

Analyst:

Allen T. Dupree

Principal Fiscal Analyst

Approved:

Frank W. Haines III

Legislative Budget and Finance Officer

 

 

This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).