Trenton, NJ - Established by the New Jersey Legislature in 1991, the New Jersey College Loans to Assist State Students (NJCLASS) program has helped hundreds of thousands of New Jersey students meet the costs of a college education.
For the 2008 academic year, NJCLASS offers a low, fixed interest rate starting at 7.62% and a 20 year repayment period. Repayment options include paying interest only, or interest and principal, during school to benefit from a lower interest rate, and to lower the total loan amount owed. A third option, available at a fixed rate of 7.92%, would defer principal and interest payments until after graduation. Recently, due to limits set forth in the underlying 2008 NJCLASS bond indenture, the latter option, referred to as “Option 3”, was discontinued for the remainder of the academic year. This change does not impact current NJCLASS borrowers. Notably, Option 3 will be restored for the 2009 academic year after the New Jersey Higher Education Student Assistance Authority (HESAA), which administers NJCLASS, secures bond financing next summer.
“Under the terms of the bond, mandated by the bond insurer, no more than 50% of the total dollar volume can be allocated to Option 3,” said E. Michael Angulo, Executive Director of HESAA. “This was not a decision by the Authority, it was a contractual obligation triggered by the unprecedented demand for NJCLASS loans.” Historically, Option 3 represented less than 45% of the total volume. However, due to the program’s extremely favorable interest rate, the lack of other affordable loan products in the marketplace, and the national recession, demand this year simply exceeded funding capacity.
In the face of the credit market crisis, New Jersey was one of handful of states able to successfully secure bond capital for student loans this year. Other states, including Pennsylvania, Michigan, and Texas suspended their loan programs entirely for 2008. At $350 million, an all-time program high, NJCLASS is one of the largest public supplemental loan programs in the nation. More than 23,200 loans have been made so far this year. “Loan funds remain available and borrowers, some with the assistance of their parents or co-signors, can either opt to begin repaying the loan immediately or they can choose to defer principal payments until graduation,” said Director Angulo. “Since the interest rate is lower under these two options than under Option 3, in the long run, the loan will cost less.”
“Governor Corzine is committed to ensuring that college remains affordable and accessible to all New Jersey students. A highly education workforce is critical for the ongoing economic success of the State. HESAA is proud of its important role in promoting higher education,” Director Angulo concluded.
Since 1959, HESAA, a non-profit, state designated Authority, has delivered over $18 billion in financial aid. Each year, over 1 million students receive assistance from outreach programs and aid programs HESAA administers including Tuition Aid Grant (TAG), the Part-time TAG for County College Students, NJSTARS and II, the Garden State Scholars programs, the Federal Family Education Loan program, NJCLASS, and NJBEST. For additional information about HESAA please visit our website at www.hesaa.org or call our Customer Care Center at 609-584-4480.