N.J. Admin. Code § 9A:10-6.11

Current through Register Vol. 56, No. 12, June 17, 2024

Section 9A:10-6.11 - Repayment of loan

(a) The Authority shall provide the borrower and cosigner, if any, with a Pre-Disbursement Disclosure Statement detailing expected monthly payment amounts and due dates of required payments at least three days prior to the first loan disbursement.

(b) There are three primary repayment options for NJCLASS Loan Program loans. The details and eligibility criteria for each specific option and their variations may be restricted by the bond indentures. Borrowers shall indicate preferred repayment options while applying for an NJCLASS Loan Program loan. Applications cannot be processed until a repayment option is selected. The Authority shall make best efforts, based on available funding, to offer borrowers the repayment option selected. If the selected option is unavailable the loan offer will include the most similar available repayment option. The interest rate is established by the Authority pursuant to N.J.A.C. 9A:10-6.9(a). The three primary repayment options for an NJCLASS loan are as follows:

1. Borrowers begin to pay the principal and interest of the loan on a monthly basis. The first payment of principal and interest is due within 60 days after the loan is first disbursed;

2. Borrowers begin to pay interest on the loan, but are not required to pay principal until graduation, withdrawal or notification of less than half-time enrollment of the student on whose behalf the loan was obtained; or

3. Borrowers are not required to pay principal or interest until graduation, withdrawal, or notification of less than half-time enrollment of the student on whose behalf the loan was obtained. Once one of these circumstances occurs, the loan reverts to a repayment schedule as set forth in (b)1 above. However, payment of interest accrued from the date of loan disbursement is deferred, and is capitalized (added to principal) on an annual basis, or more frequently as determined by the applicable bond indentures. The first monthly payment of principal and interest shall be required within 60 days after the reversion date.

(c) In the case of MedNJ loans borrowers may pay, but are not required to pay, principal or interest until the end of the deferment period. After the end of the deferment period, the loan reverts to a repayment schedule as set forth in (b)1 above. Interest accrued from the date of loan disbursement is deferred and capitalized at graduation or withdrawal and at the end of the residency deferment period. The residency deferment period for an MedNJ loan means the period beginning upon graduation from an eligible institution and ending up to three years after graduation if a borrower is completing a required eligible residency program.

(d) For loans made after August 3, 1998 that are not enrolled in RAP or HIARP, the minimum acceptable monthly payment shall be the amount required to fully repay an NJCLASS Loan Program loan in the maximum repayment period; however, the minimum acceptable monthly payment of principal and interest shall not be less than $ 50.00 per borrower for all of that borrower's NJCLASS Loan Program loans. The minimum acceptable monthly payment for borrowers in an interest only repayment status shall not be less than $ 10.00 per loan.

(e) Notwithstanding any periods of deferment and/or forbearance, unless the loan is enrolled in HIARP, NJCLASS Loan Program loans shall be paid in full within the amount of years from the date of first disbursement as specified in the NJCLASS Application, Promissory Note, and disclosures. The amount of years in which a loan is to be repaid is determined by the indentures for the bonds or notes whose proceeds are funding the loan.

(f) The borrower has the right to repay the entire loan or any portion of the loan at any time without penalty.

(g) Borrowers seeking relief under the Servicemembers Civil Relief Act, 50 U.S.C. §§ 501 et seq., must submit a request to the Authority in the manner prescribed by 50 U.S.C. § 527(b)(1).

(h) Subject to the limits of funding made available in the applicable bond indentures, borrowers are eligible for RAP if they are facing an economic hardship as set forth at (h)3 below.

1. Pursuant to the RAP monthly Standard, NJCLASS Loan payments are reduced to an amount equal to 10 percent of the total of the aggregate household income of all of the parties to the loan that exceeds 150 percent of the Federal poverty guidelines, with a minimum monthly payment of $ 5.00. The result of this calculation is the "RAP monthly payment amount."

2. Borrowers are eligible to participate in RAP for a period not to exceed two years, during which the Authority shall pay the interest on the NJCLASS loan at the stated loan rate and the payments made by the borrower shall be applied to reduce the principal balance of the loan. At the end of the borrower's participation in RAP, the new monthly repayment amount shall be recalculated based on the remaining principal balance of the loan, interest accruing thereon at the original stated loan rate, and the remaining length of the original term to repay the loan.

3. For purposes of RAP, borrowers are determined to be facing an economic hardship if the monthly amount required to pay their Standard NJCLASS loans is higher than the RAP monthly payment amount.

(i) Subject to the limits of funding made available in the applicable bond indentures, borrowers are eligible for HIARP if they have exhausted their eligibility for RAP and are facing an economic hardship, as defined at (i)6 below.

1. Pursuant to the HIARP monthly standard, NJCLASS Loan payments are reduced to an amount equal to 15 percent of the total of the aggregate household income of all of the parties to the loan that exceeds 150 percent of the Federal poverty guidelines, with a minimum monthly payment of $ 25.00. The result of this calculation is the "HIARP monthly payment amount."

2. When a borrower enters HIARP, the repayment term for a Standard NJCLASS Loan in the plan shall be extended to 25 years from the date of origination. Interest shall continue to accrue on the Standard NJCLASS Loan while in repayment under the plan at the original loan rate. Any remaining balance at the end of 25 years shall be forgiven.

3. To remain enrolled in HIARP, all parties to the Standard NJCLASS Loan shall provide the authority with annual income certification, including documentation necessary to verify income.

4. If the parties to the Standard NJCLASS Loan no longer qualify for participation in HIARP, the repayment term shall remain at 25 years and the monthly repayment amount shall revert to the standard monthly payment. Unpaid interest shall be capitalized upon return to the standard monthly payment.

5. For purposes of HIARP, standard monthly payments are the amount calculated by the Authority at the time the parties enter HIARP, by capitalizing all unpaid interest and amortizing the remaining loan balance over the remaining original loan repayment term.

6. For purposes of HIARP, borrowers are determined to be facing an economic hardship if the monthly amount required to pay their Standard NJCLASS Loans is higher than the HIARP monthly payment amount.

N.J. Admin. Code § 9A:10-6.11

Amended by 46 N.J.R. 2358(a), effective 12/1/2014

Amended by 48 N.J.R. 2433(a), effective 11/21/2016

Amended by 56 N.J.R. 374(a), effective 3/4/2024