TRENTON, NJ — Legislation sponsored by Assembly Democrats Shavonda Sumter, Mila Jasey, Dan Benson, Elizabeth Maher Muoio and Joann Downey to combat student loan debt in New Jersey was signed into law on Monday, Aug. 7.
“The only concern a college student should have after graduating is choosing which job will lead them closer to their goals,” Sumter, who represents parts of Bergen and Passaic counties, said in a press release. “It has become the norm for families and students to take on an overwhelming amount of debt to pursue educational goals. We must increase transparency under NJCLASS loan programs, better educate families on loan repayment options and requirements, as well as help families understand how much they can realistically handle in student loans.”
“Furthering your education is necessary to advance a career,” Jasey, who represents parts of Morris and Essex counties, said. “It should never be a burden to do so, and it should be encouraged without fear of debt. This is the first step toward helping families struggling to send their children to college without saddling them with cumbersome loan debt.”
The new law, formerly bill A-4239, revises the NJCLASS program to require that applicants first exhaust federal student loans, conduct income verification and limit total student loan amounts.
The new law makes three changes to the New Jersey College Loans to Assist State Students program. First, it requires that HESAA verify the financial information reported by a borrower or cosigner on an NJCLASS loan application. Second, it mandates that HESAA deduct the maximum amount of federal direct subsidized loans available to the student from the available NJCLASS loan amount when establishing the maximum annual loan amount for a student borrower. If the available interest rate for federal direct unsubsidized loans is lower than the interest rate available to the student under the NJCLASS loan program, the authority must deduct the maximum amount for federal direct unsubsidized loans available to the student from the NJCLASS loan amount. And third, it provides that a student borrower’s total loans under NJCLASS may not exceed $150,000.
The bill was approved by the Assembly, 76-0 in June. The new law took effect immediately.