Bill Text: NJ A3089 | 2018-2019 | Regular Session | Introduced
Bill Title: 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.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2018-02-08 - Introduced, Referred to Assembly Higher Education Committee [A3089 Detail]
Download: New_Jersey-2018-A3089-Introduced.html
Sponsored by:
Assemblyman GARY S. SCHAER
District 36 (Bergen and Passaic)
SYNOPSIS
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.
CURRENT VERSION OF TEXT
As introduced.
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. The 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.
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, the authority shall permit the borrower to choose any current repayment plan for an NJCLASS Loan Program loan.
c. Within 30 days of the successful completion of the loan rehabilitation repayment agreement, the authority shall remove the loan from default status and notify national credit bureaus to which the authority had reported the loan default, that the loan is no longer in default status and is paid on time or paid as agreed.
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. If 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. 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, 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 loans.
4. This act shall take effect on the first day of the sixth month following enactment.
STATEMENT
This bill requires the Higher Education Student Assistance Authority (HESAA) to establish an income-driven repayment option and a loan rehabilitation program for borrowers under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program.
The bill directs HESAA to establish an income-driven repayment option for an NJCLASS Loan Program loan. An income-driven repayment option is a student loan repayment plan that sets a borrower's monthly student loan payment at an amount that is intended to be affordable based on the borrower's income. The bill provides that the income-driven repayment option for an NJCLASS Loan Program loan will:
(1) limit a borrower's monthly payment amount to no more than 10 percent of discretionary income;
(2) discharge any remaining debt after 20 years of payments; and
(3) provide $0 monthly payments for borrowers with incomes at or below 150 percent of the federal poverty guideline for their family size.
The bill also directs HESAA to establish a loan rehabilitation program for NJCLASS Loan Program loans for the purpose of rehabilitating a defaulted loan and removing it from default status. Under the program, in order to be eligible for rehabilitation of a defaulted loan, the borrower must voluntarily make at least nine of the 10 payments required under a monthly loan rehabilitation repayment agreement entered into with HESAA. The payment amount under the loan rehabilitation repayment agreement will be determined by HESAA at 15 percent of the borrower's discretionary income, but the borrower may appeal that determination. All required payments must be made voluntarily, be for the full amount required under the agreement, and be received within 20 days of the due date for the payment. Within 30 days of the successful completion of the loan rehabilitation repayment agreement, HESAA will remove the loan from default status and notify national credit bureaus to which it reported the loan default, that the loan is no longer in default status and is paid on time or paid as agreed.
