The NJCLASS Fixed Rate Loan Program

Terms, Conditions, and Definitions, As of June 2011
   
 
  Administrative Fee: This is an amount deducted from the proceeds paid to the borrower, not to exceed 5% of the approved loan amount. The Pre-Disbursement Disclosure specifies the amount of the Administrative Fee deducted from the loan proceeds.
  Approved Loan Amount: This will be the lesser of: the borrower requested amount, the amount the school certifies the student is eligible for, or the amount HESAA determines, as set forth in the Predisbursement Disclosure.
Assignment: I shall not assign my obligation under this Note.
  Bankruptcy: This loan is an educational loan made by a governmental unit, and is subject to the exception to discharge of 11 U.S.C. §523(a)(8). This means that even if I complete a bankruptcy proceeding my obligation to pay this Note may remain.
  Cancellation: Only the borrower, coborrower, HESAA, or the certifying school has the right to cancel this loan. If the decision is to cancel all or part of this loan, the borrower should request the school to do so on their behalf within 60 days of initial disbursement. Funds that are returned within 60 days of disbursement will have the accrued interest and fees credited to this loan and shall not be due by borrower.
  Collection Costs: If I am in Default, I agree to pay all amounts, including reasonable collection agency and attorneys' fees of up to 30% of the debt collected and court and other collection costs that you incur in effecting collection of this Note, up to the maximum permitted by law.
  Credit Bureau Reporting: If I am in Default or I fail to make any payment when due on this Note, disclosure of information about the Loan to credit reporting agencies may adversely affect my credit rating and my ability to obtain other credit. You may report the status of my loan and my payment history to credit reporting agencies and others in accordance with applicable law. If I ask you, you will tell me if you have requested information about me (or about my spouse, if applicable) from a consumer-reporting agency and provide me with the name and address of any agency that furnished you with a report.
  Death or Disability: I acknowledge that if I die or become permanently disabled while any amount due under this Note remains unpaid, the other borrowers/cosigners to this Note will remain obligated to repay this Note in full. If there are no other obligors on this Note, the unpaid balance is forgiven upon notification and submission of acceptable proof in accordance with N.J.A.C. 9A:10-6.17(b) or (c). I understand that there is no discharge of this Note for Death or Disability of one or more of the borrowers/cosigners, so long as at least one borrower/cosigner survives.
 

Default: To the extent permitted by law, I will be in default and you may declare, without notice or demand, the entire unpaid amount of this Note, including principal, interest, late charges, reasonable collection costs and all other costs, immediately due and payable if I:

A. fail to make any payment to you when due and HESAA reasonably concludes that I no longer intend to honor my obligation;
B. make an assignment for the benefit of creditors, have voluntary or involuntary bankruptcy proceedings instituted by or against me, am adjudicated incompetent or incapacitated;
C. make any statement or representation on the application and/or supporting documents for the Loan, or in any subsequent communication with you that is untrue, incorrect, or incomplete;
D. fail to perform any agreement or keep any promise contained in this Note; or
E. am in default on any other loans that I may already have with you, or on any other loans I may have with you in the future.

Acceptance by HESAA of any payment, in whole or in part, of the amounts in arrears will not waive or affect any prior acceleration of this Note. HESAA may delay or fail to exercise or waive any of its rights on any occasion without losing its entitlement to exercise the right at any future time or on any future occasion. I waive presentment, demand, notice, protest and other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. If I default, I will be required to pay interest on this loan accruing after default. All past due interest may, to the extent permitted by law, be capitalized and henceforth treated as part of the outstanding principal balance. The 0.75% interest rate increase will occur upon default, if I default prior to the scheduled increase in the 13th or 49th payment of principal and interest, as applicable.
  Deferments:

(In-school) Only borrowers who select the interest only payment option or the principal and interest payment deferral option are eligible for an in-school deferment while the student is enrolled in school. To remain eligible for deferment status during the period allowed, the student on whose behalf the loan was obtained must be enrolled in an accredited educational institution on a full-time or half-time basis and must continue making satisfactory progress towards a degree. Deferred loans will automatically convert to monthly repayment of principal and interest when HESAA is notified of the student's: graduation; withdrawal; or less than half-time enrollment.

(Discretionary): HESAA, at its option, may grant a deferment of principal payments to the borrower(s) in cases when the borrower(s) is/are (a) currently unemployed and is conscientiously seeking but unable to find full-time employment, (b) enrolled in an eligible internship or residency program required by a state prior to certification for professional practice or service, (c) on active duty status in the Armed Forces, (d) in the Peace Corps, or (e) on temporary total disability. If this Note was approved with a coborrower, then the coborrower must also simultaneously qualify for any of the discretionary deferments described in this paragraph. At HESAA's sole discretion, monthly interest payments may be deferred. Borrowers who select the 10-year repayment term are only eligible for a short-term unemployment deferment.
  Disbursement: This is the transfer of funds after the loan approval date by electronic means or by check. HESAA shall disburse loans in one or multiple disbursements as determined by the School. My payment obligation on this Note begins on the date the loan is disbursed.
  Disclosure Statement: The borrower(s) and cosigner(s) will be provided a copy of the Predisbursement Disclosure detailing the interest rate for this Note, the amount of the payment, the number of payments that must be made, the number of years within which the payments must be made and other information. If any information on the Predisbursement Disclosure conflicts with the information on this Note, the information on the Predisbursement Disclosure governs.
  Forbearance: HESAA may, at its discretion, grant borrower(s) periods of forbearance in the repayment of this Note. Forbearance may be granted for situations including, but not limited to, economic hardship. While on forbearance, a borrower is permitted a temporary cessation of principal payment and is temporarily permitted to make payments of interest only. If this Note was approved with a coborrower, then the coborrower must also qualify for forbearance and be approved, at HESAA's discretion. I agree not to claim any forbearance you grant as a defense to repayment of this loan. At HESAA's sole discretion, monthly interest payments may be deferred. Borrowers who select the 10-year repayment term are only eligible for a short-term forbearance for economic hardship.
  Interest: The interest on this loan is a fixed rate. Interest is not subsidized, and will accrue during all periods of repayment, deferment and forbearance. Interest shall accrue daily on the unpaid principal balance at the rate stated on the Predisbursement Disclosure from the date of the initial loan disbursement until the date this Note is paid in full. Interest will be calculated on the basis of the actual number of days in the year and the actual number of days elapsed, including holidays and days on which you are not open. If you authorize Forbearance as to interest, you may add all such interest to the principal balance of the loan at the end of the Forbearance Period. Loans that originate with in-school full deferment of principal and interest carry a higher interest rate for the life of the loan than the other repayment options, as specified on the Pre-Disbursement Disclosure. For loans with in-school principal and interest, or interest only payment, the loan's annual interest rate will increase one time by 0.75% beginning upon whichever occurs first, either the borrower's 49th month of repaying the loan principal or upon default, for the remainder of the life of the loan. For loans with in-school full deferment of principal and interest, the loan's annual interest rate will increase one time by 0.75% beginning upon whichever occurs first, either the borrower's 13th month of repaying the loan principal or upon default, for the remainder of the life of the loan.
  Late Payment and Other Charges: HESAA reserves the right to collect from the borrower a late charge, not to exceed 6% of the required payment, if the borrower fails to pay part or all of a required payment within ten (10) days after a payment is due. HESAA reserves the right to collect a handling charge for each payment on this Note returned for any reason, including but not limited to insufficient funds or stop payment order.
  Minimum Payment: The minimum acceptable monthly principal and interest payment shall be the amount required to fully repay the loan within the maximum repayment period, and shall not be less than $50 per loan, or upon request, not less than $50 per borrower for all of that borrower's NJCLASS loans. The minimum acceptable monthly interest payment shall be the greater of the amount of interest accrued, or $10 per loan.
  Modification: HESAA reserves the right to amend any terms, conditions, and/or definitions upon written notice to the borrower.
 

Repayment: I am responsible for repaying the entire Approved Loan Amount and also the interest for this loan in a timely manner within the period of years specified in the Predisbursement disclosure. Repayment terms are dependent on the repayment option I select, and the repayment option accepted by me and defined in the Predisbursement disclosure statement. Authorized periods of deferment or forbearance do not extend the term.

Monthly Repayment: repayment of principal and interest begins within 60 days after the initial disbursement.

Monthly Interest Only: repayment of principal is deferred until graduation, withdrawal, or notification of less than half-time enrollment and monthly payment of interest is required while in deferment. At the expiration of the deferment, monthly principal and interest payments are required.
Full Deferment: repayment of principal is deferred until graduation, withdrawal, or notification of less than half-time enrollment and the interest is capitalized annually while in deferment. At the expiration of the deferment, monthly principal and interest payments are required.

I am not relieved of my responsibility and obligation to make such payments even if I do not receive billing statements or any other written notices from you. Payments will be applied first to unpaid interest and then to unpaid principal and then to unpaid costs and finally to unpaid fees, as permitted by applicable law. I may, at my option and without penalty, prepay all or any part of this Note at any time; however, any partial prepayment will not relieve me of my obligation to make regular monthly payments until this Note is paid in full. Since interest accrues daily upon the unpaid principal loan balance, if I make payments after my payment due dates, I may owe unpaid principal, unpaid interest, unpaid costs and unpaid fees, which are due and payable upon maturity of this Note.

Transfer of Promissory Note: This Note may be transferred to a holder other than HESAA. Such transfer shall not affect the rights and responsibilities of the parties as set forth. This Note is not intended to be a negotiable instrument and a subsequent holder of this Note cannot be a holder in due course.
  Governing Law: The provisions of this Note shall be governed in all respects by applicable federal law, and the laws of the State of New Jersey without regard to conflict of law rules.
 

Miscellaneous:

(A) My responsibility for paying this Note is unaffected by the liability of any other person to you or me for repayment of this Note or by your failure to notify me that a required payment has not been made. (B) Should any provision of this Note be held invalid or unenforceable, in whole or in part, such provision (or part of such provision) shall be deemed omitted from this Note, and the validity and enforceability of the remaining provisions of this Note shall not be affected thereby. (C) I will send written notice to you within 10 days after any change in my name, address, or telephone number and my failure to do so shall not affect my obligations to repay this loan in accordance with its terms. Any notice required to be given to me by HESAA will be considered effective when mailed to the latest address that HESAA has for me. I must notify you or your agent(s) in writing of information changes to my application and I must update the information on my Note whenever asked to do so. (D) If this Note is executed by more than one borrower, each borrower agrees that any communication between you and any of the borrowers will be binding on all of the borrowers and that the provisions of this Note will apply to all borrowers jointly and severally. (E) My obligation as cosigner under this Note is unconditional and absolute. I understand that the borrower's acceptance of the loan offer will be binding on me. I waive all notices to which I might be entitled by law as a Surety of the Borrower's obligations hereunder. I waive all suretyship defenses that might be available to me (including, without limitation, contribution, subrogation, and exoneration). I agree that the Borrower may agree to any forbearance or other modification of the repayment schedule and that such agreement will be binding on me. It shall not be necessary for you to resort to or exhaust your remedies against the Borrower before calling upon me to make repayment.