CHAPTER FIVE

NEW JERSEY COLLEGE LOAN TO ASSIST STATE STUDENTS (NJCLASS)

REGULAR PROGRAM

GRACE PERIOD

None

INTEREST

The interest rate is fixed and depends on the payment option chosen by the borrower and the date the loan was approved.

OPTION 1
Active payment on loan principal and interest.

• The borrower begins repaying loan principal and interest within 60 days of first disbursement.

OPTION 2
Deferred principal loan.

• The borrower begins paying loan interest within 60 days of first disbursement. Loan principal payments are deferred until 60 days after the student is no longer enrolled in school on at least a half–time basis.

• The borrower pays interest quarterly.

OPTION 3

Deferred principal and interest loan. (This repayment option is available on a limited basis.)

• The borrower makes no loan payments until the student is no longer enrolled in school on at least a half–time basis and after all periods of authorized deferment. Interest during this period is capitalized and amortized over the terms the loan principal is repaid.

• Interest begins to accrue on the date the loan is disbursed.

• The loan interest rate under all repayment options will step up 75 basis points (three quarter percent) from its initial level beginning with the borrower’s fifth year of repaying loan principal.

REPAYMENT PLAN

• The maximum repayment period is 15 years from the date the loan was disbursed.

• The borrower has the right to repay the entire loan or any portion of it without penalty.

• The loan is in default when it becomes 180 days delinquent while in monthly installments or 240 days delinquent if repaid less frequently.

DEFERMENT PROVISIONS

DEFERMENT AND FORBEARANCE OPTIONS

NOTE: CONTACT HESAA FOR DOCUMENTATION NEEDED FOR THE ABOVE LISTED OPTIONS.

DISABILITY

A loan will be forgiven if the borrower has a total and permanent disability. If there is a spouse named on the loan‚ the spouse would become the responsible borrower. If there is a cosigner on the loan and the spouse is not named on the loan‚ the cosigner becomes the responsible borrower.

NOTE: A DISABILITY FORM MUST BE COMPLETED BY THE PHYSICIAN TO DETERMINE ELIGIBILITY.

DEATH OF BORROWER

Upon the death of a borrower‚ the spouse (if signed the promissory note) would become the responsible borrower on the loan. If there is a cosigner and the borrower’s spouse did not sign the promissory note‚ the cosigner would become the responsible borrower on the loan. A loan will be forgiven in cases where the borrower is deceased and there is no spouse or cosigner.

NOTE: A CERTIFIED COPY OF A DEATH CERTIFICATE IS REQUIRED.

CANCELLATION

A loan will be fully canceled upon receipt of check within 30 days from the date the loan was disbursed. A signed authorization from the institution or borrower giving reasons for cancellation must accompany the check. If a partial cancellation of the loan is requested‚ the institution would deduct any expenses incurred by student then return the balance to NJCLASS. The monies returned would then be applied to the loan to reduce the balance.

NOTE: PLEASE CONTACT HESAA OFFICE DIRECTLY FOR SPECIFIC INFORMATION ABOUT THIS LOAN PROGRAM

VARIABLE RATE PROGRAM

GRACE PERIOD

None

REPAYMENT

Up to 23 years commencing on the date of disbursement‚ including authorized deferment periods.

DEFERMENT OPTIONS

A borrower is entitled to defer payment of principal if the borrower meets certain criteria. There are many different types of deferments available to borrowers‚ including deferments for periods of unemployment‚ or further study‚ service as an intern or medical resident‚ service in the Peace Corps‚ and temporary total disability. A borrower may experience a period of temporary economic hardship but may not be eligible for a deferment. If this occurs‚ the borrower may request a reduction or postponement of principal payments on the loan. The maximum allowable time period for economic hardship forbearance is 18 months.

TOTAL AND PERMANENT DISABILITY

If the borrower become totally and permanently disabled the borrower’s legal obligation to repay this loan is forgiven.

DEATH OF BORROWER

If the borrower dies‚ the loan is forgiven.

PLEASE CONTACT HESAA OFFICE DIRECTLY FOR SPECIFIC INFORMATION ABOUT THIS LOAN PROGRAM