N.J. Admin. Code § 9A:10-6.13

Current through Register Vol. 56, No. 11, June 3, 2024

Section 9A:10-6.13 - NJCLASS Consolidation Loan Program

(a) Subject to the availability of funds, the Authority offers an NJCLASS Consolidation Loan Program for the purpose of permitting existing NJCLASS borrowers and/or co-borrowers to consolidate their existing NJCLASS Loan Program loans into a single NJCLASS Consolidation Loan. The purpose of the NJCLASS Consolidation Loan Program is to provide borrowers with high NJCLASS Loan Program debt an extended repayment term, which provides for lower monthly payments.

(b) To participate in the NJCLASS Consolidation Loan Program, either the borrower or the co-borrower on the NJCLASS Consolidation loan shall also be either the borrower or the co-borrower on each of the underlying loans being consolidated and shall have at least $ 30,000 outstanding in current NJCLASS loans that will be consolidated.

(c) Only NJCLASS Loan Program loans in monthly repayment of principal and interest are eligible for consolidation into an NJCLASS Consolidation Loan. Refinance Loans and existing NJCLASS Consolidation Loans are not eligible to be consolidated. The student for whom the underlying NJCLASS Loan Program loan was obtained shall no longer be enrolled in school. He or she shall have graduated or withdrawn.

(d) To be eligible for an NJCLASS Consolidation Loan, the NJCLASS borrower and/or co-borrower shall:

1. Be a citizen, national or legal resident of the United States or be in the United States for other than temporary purposes and intend to become a permanent resident (as evidenced by United States Citizenship and Immigration Services, or its successor agency, documentation);

2. Not owe a grant refund, be in default on a student loan, have a student loan written off as uncollectible, or be in violation of any of the other criteria for determining creditworthiness as outlined in (f) below;

3. Provide an acceptable cosigner if the Authority determines that one is required;

4. In the case of any Federal student loan amount, or any NJCLASS Loan Program Loan, Refinance Loan, or NJCLASS Consolidation Loan amount that previously was canceled due to the borrower's total and permanent disability, obtain a certification from a physician that the borrower's condition has improved and that the borrower is able to engage in substantial gainful employment and sign a statement acknowledging that the NJCLASS Consolidation Loan that the borrower receives cannot be canceled in the future on the basis of any impairment present when the new loan is made, unless that impairment substantially deteriorates; and

5. Provide at least two references for the borrower, and co-borrower if applicable, and at least two references for the cosigner, and joint cosigner if applicable.

(e) The Higher Education Student Assistance Authority shall have final decision-making authority concerning the eligibility of a borrower, co-borrower and/or cosigner to participate in the NJCLASS Consolidation Loan Program.

(f) An NJCLASS Consolidation Loan borrower and/or co-borrower shall meet minimum income requirements and be determined creditworthy by the Authority in order to be eligible for an NJCLASS Consolidation Loan. Cosigners shall be required to meet the minimum income and creditworthy determination by the Authority if the borrower or co-borrower are unable to do so.

1. To be approved for an NJCLASS Consolidation loan, a creditworthy borrower, co-borrower or cosigner shall have documentable annual income that exceeds Federal poverty guidelines, as adjusted annually by the United States Department of Health and Human Services. The amount by which income must exceed Federal poverty guidelines is determined by the indentures for the bonds or notes whose proceeds are funding the loan.

2. A borrower with one or more of the items listed below in his or her credit history may be denied an NJCLASS Consolidation loan for not being creditworthy. These items include delinquent accounts, paid and unpaid collection accounts, paid and unpaid charged off accounts, foreclosure, repossession, bankruptcy, a paid or unpaid judgment. However, a borrower in the NJCLASS Consolidation Loan Program may be eligible if the borrower is able to secure a creditworthy cosigner.

(g) NJCLASS Consolidation Loan borrowers and/or co-borrowers may be permitted to add additional eligible NJCLASS Loan Program loans to an existing NJCLASS Consolidation Loan provided sufficient funding is available and the origination period has not expired.

(h) The process to borrow under the NJCLASS Consolidation Loan Program shall be as follows:

1. The borrower shall complete the NJCLASS Consolidation Loan application and promissory note. All parts of the application and promissory note shall be completed and all requested documentation shall be submitted to the Authority.

2. The Authority shall process the application and upon approval will provide the applicant(s) an NJCLASS loan offer. Borrowers will have 30 days to accept the loan. Borrowers will not receive the NJCLASS Consolidation Loan unless they accept the offer.

3. The NJCLASS Consolidation Loan amount will be calculated based upon the sum of the outstanding principal and interest balance of each underlying NJCLASS Loan Program loan being consolidated and the NJCLASS Consolidation Loan application/administrative fee, as specified in (i) below, will be charged to the borrower.

4. The Authority shall provide the borrower, co-borrower and cosigner, if any, with a completed NJCLASS Consolidation Loan Pre-Disbursement Disclosure Statement or other disclosures as required by Federal law.

5. Consolidation loan proceeds will be applied to satisfy the outstanding NJCLASS Loan Program loans included in the consolidation. No proceeds will be issued to the borrower. Any adjustment amount will be applied to the outstanding principal balance of the new NJCLASS Consolidation Loan.

(i) NJCLASS Consolidation Loan borrowers and/or co-borrowers may be required to pay an application/administrative fee as prescribed by the bond indentures. This fee will be added to the sum of the outstanding principal and interest balance of each underlying NJCLASS Loan Program loan being consolidated at the time of approval. In addition, borrowers and/or co-borrowers may be required to pay a servicing fee for the NJCLASS Consolidation Loan, if provided for by the promissory note.

(j) The interest rate on the NJCLASS Consolidation Loan will be a fixed rate based upon a calculation or rate defined in the bond indentures.

(k) Late fees may be charged on an NJCLASS Consolidation loan in accordance with N.J.A.C. 9A:10-6.10.

(l) NJCLASS Consolidation loan borrowers shall begin to pay the principal and interest of the NJCLASS Consolidation loan on a monthly basis. The first payment of principal and interest is due within 60 days after the loan is disbursed. The length of the repayment term will be determined based on the amount of the NJCLASS Consolidation loan at the time of approval as follows:

1. Consolidation loan borrowers whose outstanding loan obligations are under $ 60,000 will obtain a 25-year repayment term.

2. Consolidation loan borrowers whose outstanding loan obligations exceed $ 60,000 will receive a 30-year repayment term.

3. The borrower and/or co-borrower have the right to repay the entire loan or any portion of the loan at any time without penalty.

4. Notwithstanding any period of forbearance, an NJCLASS Consolidation loan shall be paid in full no later than the maximum repayment term, as disclosed to the borrower at the time of disbursement.

(m) The Authority may also, at its discretion, grant borrowers periods of deferments or forbearance in the repayment of the NJCLASS Consolidation Loan(s). Forbearance will only be granted if the ability of both the borrower and co-borrower to make scheduled payments has been impaired based on the same or differing conditions. Forbearance may be granted for situations including, but not limited to, financial hardship, which means situations where the overall financial circumstances of the individual seeking relief are such that he or she is unable to maintain a basic standard of living and still make NJCLASS Consolidation Loan debt payments. During periods of forbearance, the NJCLASS Consolidation Loan will revert to quarterly or monthly payments of interest only. The maximum allowable time period for financial hardship forbearance set forth in N.J.A.C. 9A:10-6.12(d) " pertains to NJCLASS Consolidation Loans. Deferments will be granted in the event of temporary total disability of an eligible student borrower. To qualify for this deferment, the student borrower shall submit a request in a form prescribed by the Authority and provide the Authority with a statement from a physician, who is a doctor of medicine or osteopathy and is legally authorized to practice, certifying that the student borrower is temporarily totally disabled. If an eligible student borrower qualifies for this deferment, it will be granted regardless of whether the other parties to the loan qualify for a deferment.

(n) NJCLASS Loan Program provisions, which pertain to delinquency, set forth at N.J.A.C. 9A:10-6.14; credit bureau reporting, set forth at N.J.A.C. 9A:10-6.15; default, consequences of default, and rehabilitation, set forth at N.J.A.C. 9A:10-6.16; and discharge, set forth at N.J.A.C. 9A:10-6.17 shall be in effect for NJCLASS Consolidation Loans.

N.J. Admin. Code § 9A:10-6.13

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 49 N.J.R. 2965(a), effective 9/5/2017

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