STUDENT LOAN GUIDE

Student

Loan Guide

STATE OF NEW JERSEY

STUDENT LOAN GUIDE

Student

Loan Guide

OUR MISSION 3

TYPES OF AID

Free Application for Federal Student Aid (FAFSA) 4

Grants and Scholarships 4

Institutional Financial Aid 4

NJBEST College Savings Plans 4

Tuition Payment Plans 4

Additional Sources of Aid 5

The Award Package 5

STUDENT LOANS

Paying for College When Loans are the Only Remaining Option 6

Federal Direct Student Loans 6

STUDENT LOANS REPAYMENT

Understand Your Obligation 8

Uphold Your Promise 8

Exit Counseling 9

Federal Repayment Plans 9

Standard Repayment 10

Extended Repayment 10

Graduated Repayment 10

Income Contingent Repayment (ICR) 11

Income-Based Repayment (IBR) 11

PAYE 11

SAVE Repayment Plan 12

REPAYE 12

Repayment Plan 16

Federal Deferment & Forbearance 16

Common Concerns 17

LOAN FORGIVENESS & CONSOLIDATION

Teacher Loan Forgiveness 18

Public Service Loan Forgiveness 18

Loan Consolidation 19

How Direct Student Loan Consolidation Works 19

Direct Loan Consolidation Payment Relief 19

DEFAULTING ON A LOAN

Consequences of Default 20

Loan Rehabilitation 20

FEDERAL PARENT & LOAN ALTERNATIVE LOANS

Federal Direct PLUS Loan 21

Private Alternative Loans 21

Fixed Interest vs. Variable/Adjustable Interest Rates Fixed interest rate 22

Private Student Loans 23

STANDARD NJCLASS LOAN

State of New Jersey Standard NJCLASS Family Loan Program 24

Affordable Repayment Options 26

NJCLASS ReFi

NJCLASS Consolidation Loan 28

RESOURCES

Tips on Applying for a Loan 29

How to Determine Your Estimated Monthly Payment 31

NJCLASS Comparison Chart 42

Table of Contents

Student

Loan Guide

HESAA, the Higher Education Student Assistance Authority, is the only

New Jersey state agency with the sole mission of providing students and

families with nancial and informational resources for students to pursue

their education beyond high school.

This brochure highlights the major State and federal student aid programs.

However, student nancial assistance is also available through institutions

and private sources. You should work closely with your campus nancial aid

ofce regarding the availability of student aid funds. You may also contact

HESAA’s Customer Care Line at 609-584-4480 or visit our website at:

www.hesaa.org.

The Student Loan Guide provides general student loan information to assist

students and their families in planning and paying for a postsecondary

education through the use of student loans.

This guide contains information that covers the Federal Loan programs,

New Jersey’s State loan program-NJCLASS, and information on other

alternative private loan options. Our goal is to live by our mission and provide

you with information to assist you in navigating your way through the student

loan process.

Our Mission

Student

Loan Guide

Free Application for Federal Student Aid (FAFSA)

The rst step in the nancial aid process is completion of the FAFSA. Students

use FAFSA on the Web (www.fafsa.gov or www.studentaid.gov) to complete

their applications. The information on your FAFSA is transmitted to the schools

that you list on the application and the State of New Jersey. Information on

the FAFSA assists the federal government, the colleges and the State in

determining your eligibility for college grants, State grants, and federal nancial

aid.

Grants & Scholarships

You should rst explore all of your options for free money. Many students use

State, federal and college grants and scholarships to help pay for their

education. Neither grants nor scholarships have to be repaid. Because the

FAFSA is used to determine eligibility for many grants and scholarships, it is

important that you complete your application timely. Be aware of State deadlines

for applying for State grants and scholarships. Make sure you also investigate

private scholarships or community scholarships that might be available to you.

Institutional Financial Aid

The term “Institutional Financial Aid” refers to any scholarship or grant awarded

by the university or college’s own restricted or unrestricted funding source(s).

Institutional-based nancial assistance programs offered and controlled by the

individual colleges, such as alumni scholarships and endowments from private

donors, are referred to as institutional aid. Students should explore all

opportunities available to them.

NJBEST College Savings Plans

HESAA offers a State-sponsored 529 college

savings plan to help families meet the cost of col-

lege. Saving with NJBEST (New Jersey Better

Educational Savings Trust) offers many benets,including State and federal

tax-free earnings, and also offers a

scholarship of up to $6,000 for those students who qualify and who attend a

school in New Jersey. (visit www.njbest.com for more information)

Tuition Payment Plans

Check with your school to see if it participates in a tuition payment plan that will

allow you to make monthly payments to the college over the school year.

Types of Aid

Student

Loan Guide

Additional Sources of Aid

Other sources of aid to assist with college costs include:

• Personal savings

• Community and corporate grants and scholarships

• Service programs such as AmeriCorps, a domestic Peace Corps

• Employer-sponsored tuition assistance programs

The Award Package

Generally, each school you apply to will provide you with an award package that

contains information about the nancial aid awarded to you. The award package

may contain federal, State and institutional grants and scholarships, and other

types of aid to help you meet the costs of going to college or career school.

Federal student loans, known as Direct loans, are usually included as part of the

Financial Aid package process.

Types of Aid

Student

Loan Guide

Paying for College When Loans are the Only Remaining Option

Student loans can help you achieve your educational goals, but HESAA

encourages you to borrow responsibly and requires all nancial aid options,

including grants, scholarships and federal student loans to be exhausted, before

applying for any private loan, including HESAA’s NJCLASS xed-rate loan.

Federal Direct Student Loans

The Direct Loan program makes highly affordable loans available to students.

Students do not have to pass a credit check and interest on federal loans

is xed. Repayment begins six months after leaving school and there are

never any prepayment penalties. These loans can either be subsidized or

unsubsidized. For any loan disbursement on or after July 1, 2024 and

before June 30, 2025 the interest rate is 6.53% for undergraduates and

8.08% for graduate/professional students. A 1.057% origination fee is

deducted from each disbursement. To apply, check your college’s nancial

aid website or go to www.studentloans.gov.

Subsidized: for students with demonstrated nancial need, as determined by

federal regulations. Interest is paid by the federal government while a student

is in school at least half time, during the six month grace period and during

deferment periods (a period during which a borrower, who meets certain criteria,

may temporarily suspend loan payments).

Unsubsidized: not based on nancial need; interest is charged during all

periods, while the student is in school and during grace and deferment periods.

Your school will tell you how much you may borrow and the amount of federal

loans you are eligible to receive. There are loan limits based upon your year

of attendance and aggregate limits also apply. For dependent undergraduate

students, the annual loan limits are as follows:

Dependent

Undergraduates

Total

Subsidized/Unsubsidized

Additional

Unsubsidized

First Year

$3,500 $2,000

Second Year

$4,500 $2,000

Third Year and Beyond

$5,500 $2,000

Student Loans

Student

Loan Guide

The school’s nancial aid ofce will provide you with instructions and guidance

about applying for federal student loans. Some schools may want you to

apply through their own website and some schools may direct you to the

U. S. Department of Education’s website.

All Federal Direct Student Loans require rst-time student borrowers to

complete entrance counseling so that you understand the obligations

associated with federal student loans.

Once you have completed the entrance counseling, you will be required to

complete a Master Promissory Note (MPN). The MPN contains all the legal

terms and conditions associated with the federal student loan and is the legal

document that obligates you to repay your student loans. The MPN allows for

multiple year borrowing. If you change schools, you may be required to

complete a new MPN.

Check with your college to nd out how to complete your student loan entrance

counseling session or go to www.mappingyourfuture.org for more information.

With Direct Loans, you:

• Borrow through the school from the federal government and have a single

contact, a Direct Loan Servicing Center, for everything related to the

repayment of your loans, even if you receive Direct Loans at different schools.

• Have online access to your Direct Loan account information 24 hours a day,

7 days a week at Direct Loans online at:

https://studentaid.gov/h/manage-loans.

• Can choose from several repayment plans that are designed to meet the

needs of almost any borrower, and you can switch repayment plans if your

needs change.

Student Loans

Student

Loan Guide

Remember: Understand Your Obligation

You must repay your student loans—even if you do not graduate or get a job in

your chosen eld. Failure to make scheduled payments could lead to default

which would damage your credit rating and lead to other serious consequences.

Before you borrow a student loan, think about whether you will be able to

repay it. This loan will reduce what you can spend in the future on a car, home,

furniture and other living expenses. Here are some things you can do while you

are in college to help save money:

• Identify needs versus wants and make your purchases accordingly.

• Make a realistic budget and stick to it.

• Take advantage of work-study opportunities or get a part-time job.

For more information on nancial literacy download our Reach Higher Guide at:

www.hesaa.org/Documents/Publications/ReachHigherGuide.pdf

Repay: Uphold Your Promise

Repaying your student loans is a serious legal obligation, so you need to set

aside enough money to make your student loan payment on time and in full

each month. Your lender will depend on you to uphold your promise to repay so

that they can make loans to other deserving students. By paying your student

loan on time, you will be acting as a responsible borrower. You will also be

successfully managing your nances and establishing good credit.

Some loans offer a grace period when you graduate, leave school or drop

below half-time status. During the grace period, you are not required to make

monthly payments. In most instances this will increase the amount that you

will eventually repay as interest charges are increasing on your loan(s), so

check with your lender. At the end of your grace period, you must begin making

monthly payments.

Contact your lender if you are unable to make your monthly payments. You may

qualify for other repayment options, or be able to postpone or reduce your

payments by applying for a deferment or forbearance. These should be used

only in times of extreme need and will increase the amount that is eventually

repaid on your loan.

Student Loans Repayment

Student

Loan Guide

Exit Counseling

Federal regulations require federal student loan borrowers to complete exit

counseling before they leave school (graduate, withdraw or drop below half-time

status). This requirement ensures that borrowers will receive essential

information regarding their rights and responsibilities as a student loan

borrower. Borrowers will receive information about the types of loans received,

when and where to make payments, what to do if payments cannot be made,

and what can happen if payments are not made.

In many cases, when a borrower fails to complete exit counseling a hold will

be placed on the borrower’s records. Borrowers will not be able to re-enroll in

classes, or obtain other college/university services and documents including,

but not limited to, a borrower’s transcripts or diploma until it’s completed.

Federal Repayment Plans

Student borrowers are not required to begin making payments on their

Federal Direct loans until after they drop below half-time attendance.

Following graduation, withdrawal, or less than half-time enrollment, borrowers

are provided a six-month grace period on Federal Direct Stafford loans and a

nine-month grace period on Federal Perkins Loan.

The repayment period for a Direct PLUS Loan begins at the time the PLUS

loan is fully disbursed, and the rst payment is due within 60 days after the nal

disbursement. However, a graduate student PLUS Loan borrower (as well as a

parent PLUS borrower who is also a student) can defer repayment while the

borrower is enrolled at least half-time, and, for PLUS loans rst disbursed on or

after July 1, 2008, for an additional six months after the borrower is no longer

enrolled at least half-time. Interest that accrues during these periods will be

capitalized if not paid by the borrower during the deferment.

Parent PLUS Loan borrowers whose loans were rst disbursed on or after

July 1, 2008, may choose to have repayment deferred while the student for

whom the parent borrowed is enrolled at least half-time and for an additional

six months after that student is no longer enrolled at least half-time. Interest that

accrues during these periods will be capitalized if not paid by the parent during

the deferment.

Student Loans Repayment

Student

Loan Guide

Not all borrowers may be eligible for all repayment plans. Some plans are limited

and based upon the type of loan and when the loan was obtained. Go to

https://studentaid.gov/manage-loans/repayment/plans for more information.

Standard Repayment

With the standard plan, borrowers pay a xed amount each month until loans

are paid in full. Monthly payments will be at least $50, and borrowers have up

to 10 years to repay.

The standard plan is good if the borrower can handle higher monthly payments

because they will repay their loans more quickly. Monthly payment under the

standard plan may be higher than it would be under the other plans because

loans will be repaid in the shortest time. For the same reason, borrowers may

pay the least amount of interest due to the 10-year limit on repayment.

Extended Repayment

To be eligible for the extended plan, borrowers must have more than $30,000

in Direct Loan debt and must not have had an outstanding balance on a Direct

Loan as of October 7, 1998. Under the extended plan borrowers have 25 years

for repayment and two payment options: xed or graduated. Fixed payments are

the same amount each month, while graduated payments start low and increase

every two years.

This is a good plan if borrowers need to make smaller monthly payments.

Because the repayment period will be 25 years, borrowers’ monthly payments

will be less than with the standard plan. However, borrowers may pay more in

interest because they’re taking longer to repay the loans. Remember that the

longer loans are in repayment, the more interest will be paid.

Graduated Repayment

With this plan payments start out low and increase every two years. The length

of the repayment period will be up to 10 years. If borrowers expect their income

to increase steadily over time, this plan may be right for them. Monthly payment

will never be less than the amount of interest that accrues between payments.

Although monthly payment will gradually increase, no single payment under this

plan will be more than three times greater than any other payment.

Student Loans Repayment

Student

Loan Guide

Income Contingent Repayment (ICR)

See chart on page 13 for loan repayment eligibility. This plan gives the

exibility to meet Direct Loan obligations without causing undue nancial

hardship. Each year, monthly payments will be calculated on the basis of your

adjusted gross income (AGI, plus your spouse’s income if married), family size,

and the total amount of your Direct Loans. Under the ICR plan borrowers will

pay each month the lesser of:

1. The amount borrowers would pay if they repaid the loan in 12 years

multiplied by an income percentage factor that varies with the borrower’s

annual income, or

2. 20% of monthly discretionary income*.

*Monthly discretionary income equals AGI minus the poverty level for the state

of residence and family size, divided by 12.

If payments are not large enough to cover the interest that has accumulated

on the loans, the unpaid amount will be capitalized once each year. However,

capitalization will not exceed 10% of the original amount owed when the loan

entered repayment. Interest will continue to accumulate but will no longer be

capitalized.

The maximum repayment period is 25 years. If the borrower has not fully repaid

the loans after 25 years (time spent in deferment or forbearance does not count)

under this plan, the unpaid portion will be discharged. Borrowers may, however,

have to pay taxes on the amount that is discharged.

Income-Based Repayment (IBR)

See chart on page 13 for loan repayment eligibility

Under this plan the required monthly payment will be based on the borrower’s

income during any period when they have a partial nancial hardship. Monthly

payments may be adjusted annually based on borrowers income. If the

borrowers meet certain requirements over a specied period of time, they may

qualify for cancellation of any outstanding balance on the loans.

Student Loans Repayment

Student

Loan Guide

PAYE

See chart on page 16 for loan repayment eligibility

The PAYE Plan is similar to the IBR Plan, but caps payments at 10 percent of

discretionary income and the forgiveness timeline is shortened to 20 years.

People with Direct Subsidized and Direct Unsubsidized loans for undergraduates

and Direct Plus Loans for graduates and professionals can qualify for the PAYE

plan if they had no loan balance before October 2008 and a new loan after

Oct. 1, 2011. If your monthly payment does not cover the full amount of interest

on your subsidized loan, the government pays the full amount of the difference

for the rst three years. The loan balance is forgiven after 20 years of payments

and the forgiven amount is taxed as income.

REPAYE

See chart on page 16 for loan repayment eligibility

The REPAYE Plan is a good option for those who do not qualify for the PAYE or

IBR plans. There is no maximum income requirement, but payments may be

higher than the standard 10-year repayment plan amount. Income is based on

both you and your spouse’s combined income even if you do not le your taxes

jointly. If your monthly payment does not cover the full amount of interest, the

government pays the full amount of the difference on your subsidized loans for

the rst three years, half of the difference after the rst three years and half of

the difference on your unsubsidized loans during all periods. The loan balance is

forgiven after 20 years for loans for undergraduate study and after 25 years for

graduate or professional study. The forgiven amount is taxed as income.

SAVE Repayment Plan

The Saving on a Valuable Education (SAVE) Plan replaces the existing Revised

Pay As You Earn (REPAYE) Plan. Borrowers on the REPAYE Plan will

automatically get the benets of the new SAVE Plan.

The SAVE Plan, like other income-driven repayment (IDR) plans, calculates your

monthly payment amount based on your income and family size. The SAVE Plan

provides the lowest monthly payments of any IDR plan available to nearly all

student borrowers.

What You Need to Know

The SAVE Plan includes multiple new benets for borrowers. The changes on

the next page will go into effect this summer. Additional benets will go into effect

in 2024.

Student Loans Repayment

Student

Loan Guide

New Plan Change What This Means

The SAVE Plan increases the income

exemption from 150% to 225% of the

poverty line.

The new plan can signicantly

decrease your monthly payment

amount compared to all other

income-driven repayment plans.

Your monthly payment amount is

based on your discretionary

income—dened as the difference

between your adjusted gross

income (AGI) and 225% of the U.S.

Department of Health and Human

Services Poverty Guideline amount

for your family size.

That means you will not owe loan

payments if you are a single borrower

earning $32,800 or less or a family of

four earning $67,500 or less (amounts

are higher in Alaska and Hawaii).

Borrowers earning more than these

amounts will save at least $1,000 per

year, compared to the current income-

driven repayment plans.

The plan eliminates 100% of

remaining interest for both subsidized

and unsubsidized loans after a

scheduled payment is made under

the SAVE Plan.

If you make your monthly payment,

your loan balance won’t grow due to

unpaid interest.

For example: If $50 in interest

accumulates each month and you

have a $30 payment, the remaining

$20 would not be charged.

The SAVE Plan excludes spousal

income for borrowers who are married

and le separately.

This change removes the need for

your spouse to cosign your IDR

application.

Student Loans Repayment

Student

Loan Guide

When can I apply for the SAVE Plan?

A beta version of the updated IDR application is now available and includes the

option to enroll in the new SAVE Plan.

We’re accepting applications now to help us rene our processes ahead of the

ofcial launch. If you submit an IDR application now, it will be processed and will

not need to be resubmitted. The application may be available on and off during

this beta testing period. If the application is not available, try again later. You will

receive an email conrmation after you have applied.

If you had already enrolled in the REPAYE Plan or recently applied, you will

automatically be put on the SAVE Plan. There is no need to reapply or request

to change your plan. Learn how to check which plan you’re on.

How do I apply for the SAVE Plan?

Use the IDR application to apply for the SAVE Plan now. You can select the

option for your loan servicer to place you on the lowest monthly payment plan

(this will usually be SAVE).

What if I’m already on an IDR plan?

If you are already on an IDR plan, check to see if you are on the REPAYE Plan.

your loans. Each loan will list a repayment plan. If you see that you are in the

REPAYE Plan, that means you’ll automatically be enrolled in the SAVE Plan later

this summer. If you’re on a different repayment plan, you’ll need to switch into

REPAYE now, or SAVE once it’s available, to receive the benets of the SAVE

Plan. If you don’t have a StudentAid.gov

account, you can create an account.

How much will I pay each month?

The SAVE Plan calculates your monthly payment amount based on your income

and family size. Starting this summer, if you’re making $32,800 a year or less

(which is roughly $15 dollars an hour), your monthly payment will be $0. If you’re

making more than that, you will save at least $1,000 a year, compared to other

IDR plans.

Student Loans Repayment

Student

Loan Guide

Estimated Monthly Payment Under the SAVE Plan

Income

$60k $227 $130 $34 $0 $0

$50k $143 $47 $0 $0 $0

$40k $60 $0 $0 $0 $0

$30k $0 $0 $0 $0 $0

$20k $0 $0 $0 $0 $0

$10k $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0

1 2 3 4 5

Family Size

Student Loans Repayment

Savings for a Sample

Student Loan Borrower

Alexander

Annual Income: $38,000

Loan Balance: $25,000

Interest Rate: 5%

on a Direct Subsidized Loan

Alexander is a borrower with no dependents

and makes $38,000 a year. He would save

$91 per month under the SAVE Plan.

Assumes family lives in contiguous 48 states. Estimates

are for illustrative purposes only. Your loan servicer will

calculate your actual monthly payment under the

SAVE Plan.

$134

Previous Monthly

Payment Under REPAYE

$43

New Monthly

Payment Under SAVE

Student

Loan Guide

Repayment Plan

To determine your estimated Federal repayment amount visit

www.studentloans.gov and click on the repayment and consolidation link.

The chart below shows the types of federal student loans that you can repay

under each of the income-driven repayment plans.

Loan Type

REPAYE

Plan

PAYE

Plan

IBR

Plan

ICR

Plan

Direct Subsidized Loans Eligible Eligible Eligible Eligible

Direct Unsubsidized Loans Eligible Eligible Eligible Eligible

Direct PLUS Loans made to

graduate or professional

students

Eligible Eligible Eligible Eligible

Direct PLUS Loans made

to parents

Not

eligible

Not eligible

Not

eligible

Eligible if

consolidated*

Direct Consolidation Loans

that did not repay any PLUS

loans made to parents

Eligible Eligible Eligible Eligible

Direct Consolidation Loans

that repaid PLUS loans

made to parents

Not

eligible

Not eligible

Not

eligible

Eligible

* If a loan type is listed as “eligible if consolidated,” this means that if you consolidate that

loan type into a Direct Consolidation Loan, you can then repay the consolidation loan

under the income-driven plan. For example, only Direct Loans can be repaid under the

REPAYE, PAYE, and ICR plans. However, if you consolidate a FFEL Program Loan or

Federal Perkins Loan into a Direct Consolidation Loan, you may then be able to repay the

Direct Consolidation Loan under the REPAYE, PAYE, and ICR Plan (depending on the type

of loan that you consolidate). Note that consolidation is not the right choice for all

borrowers or all loan types. In particular, you may lose certain loan benets if you

consolidate a Federal Perkins Loan.

Federal Deferment & Forbearance

During repayment borrowers may encounter some unforeseen nancial

situations that make it difcult to repay student loans. It’s very important during

these times that borrowers don’t ignore the payment. Borrowers must still honor

their obligation and there are options available to help ease nancial burden.

These two options are known as Deferment and Forbearance.

Student Loans Repayment

Student

Loan Guide

Deferment is a period of time during which no payments are required and

interest does not accrue on Subsidized Direct Loans. In the case of

Unsubsidized Direct Loans, interest must be paid during a deferment period,

or the interest is capitalized.

Deferment Types:

Military Unemployment

Economic

Hardship

In School

Deferment

Disability

Forbearance is a temporary postponement or reduction of payments due to

nancial hardship. During this time, interest still accrues and can either be paid

monthly or added back into the balance of the loan.

For more detailed information about deferments and forbearance see your

servicer’s website or go to www.direct.ed.gov/postpone.html.

Common Concerns

Not knowing what type of loan a borrower has, or who services their loan, is a

very common concern for borrowers. In response to these common questions,

the United States Department of Education provides the National Student Loan

Data System (NSLDS) at https://studentaid.gov/manage-loans/repayment/

servicers, as the central database for federal student aid. Borrowers will need

their Federal Student Aid PIN to access the database. For more information on

FSA ID Account, visit https://studentaid.gov/fsa-id/create-account/launch.

Payment issues are another concern to borrowers, especially when a payment

is not made or a borrower is only able to make a partial payment. If you

encounter payment issues, Don’t Ignore the Problem.

Borrowers can:

• Contact their lender immediately to discuss options.

• Consider changing your repayment plan if the current one is not favorabl

• Keep track of all communications.

Student Loans Repayment

Student

Loan Guide

Under certain circumstances, borrowers may qualify to have all or a portion

of their loans forgiven. To qualify, borrowers must perform volunteer work,

perform military service, teach or practice medicine in certain types of

communities, or meet other criteria specied by the forgiveness program.

To learn more about loan forgiveness programs, visit: https://studentaid.gov/

manage-loans/forgiveness-cancellation. Federal Perkins loan borrowers and/or

Federal Direct loan borrowers may be eligible for partial loan forgiveness or loan

redemption.

Teacher Loan Forgiveness

The Teacher Loan Forgiveness Program is intended to encourage individuals

to enter and continue in the teaching profession. Under this program,

individuals who teach full-time for ve consecutive, complete academic

years in certain elementary and secondary schools that serve low-income

families and meet other qualications may be eligible for forgiveness of up

to a combined total of $17,500 in principal and interest on their FFEL and/or

Direct Loan program loans. (Note: As of August 14, 2008, an otherwise eligible

borrower may qualify for forgiveness if the borrower has provided qualifying

teaching services at one or more locations that are operated by an educational

service agency.)

Public Service Loan Forgiveness

The Public Service Loan Forgiveness Program was created to encourage

individuals to enter and continue to work full time in public service jobs. Under

this program, borrowers may qualify for forgiveness of the remaining balance

due on eligible federal student loans after they have made 120 payments on

loans under certain repayment plans while employed full time by certain public

service employers.

Only non-defaulted loans made under the William D. Ford Direct Loan Program

are eligible for loan forgiveness. The Direct Loan Program includes the following

types of loans:

• Federal Direct Stafford Loans (Direct Subsidized Loans)

• Federal Direct Unsubsidized Stafford Loans (Direct Unsubsidized Loans)

• Federal Direct PLUS Loans (Direct PLUS Loans) for parents and

graduate or professional students

• Federal Direct Consolidation Loans (Direct Consolidation Loans)

Loan Forgiveness & Consolidation

Student

Loan Guide

Loan Consolidation

A Federal Consolidation Loan allows borrowers to combine all the federal

student loans received to nance college education into a single loan.

This program does not allow for alternative or supplemental private loan

consolidation.

How Direct Student Loan Consolidation Works

Direct loan consolidation is facilitated through the United States Department of

Education. Essentially, borrowers provide the account information for each of

your federal student loans and they are all pooled together. The interest rate

on a Federal Direct Consolidation loan is xed and is based on the weighted

average of your loans rounded up to the nearest 1/8% and capped at 8.25%.

Direct Loan Consolidation Payment Relief

One of the key benets of consolidating federal student loans is payment relief.

By combining all loans into one consolidated loan, it can lengthen your

repayment term from the standard 10 years to up to 30 years (lowering your

monthly payments), depending on the amount of the education debts.

Loan Forgiveness & Consolidation

Student

Loan Guide

Default on a loan

Default means the borrower failed to make payments on their student loan

according to the terms of their promissory note, the binding legal document

signed at the time the borrower took out the loan. In other words, they failed

to make loan payments as scheduled. The school, the nancial institution that

made or owns the loan, the loan guarantor, and the federal government all can

take action to recover the money owed. Here are some consequences

of default.

Consequences of Default

• National credit bureaus can be notied of default, which will harm borrowers’

credit ratings, making it hard to buy a car or a house.

• Borrowers will be ineligible for additional federal student aid if they decide to

return to school.

• Loan payments can be deducted from borrowers’ paychecks.

• State and federal income tax refunds can be withheld and applied toward the

amount owed.

• Borrowers will have to pay late fees and collection costs on top of what is

already owed and can be sued.

Obviously, borrowers don’t want to let loans go into default. However, should this

happen, borrowers should nd out what options are available by contacting their

loan servicer.

Loan Rehabilitation

One option for getting your federal loan out of default is loan rehabilitation.

To start the loan rehabilitation process, you must contact your loan holder. If

you’re not sure who your loan holder is, you can login at https://studentaid.gov/

manage-loans/default/get-out to get your loan holder’s contact information.

To rehabilitate a defaulted Direct Loan or FFEL Program loan, you must

• agree in writing to make nine voluntary, reasonable, and affordable monthly

payments (as determined by your loan holder) within 20 days of the due date,

and

• make all nine payments during a period of 10 consecutive months.

Defaulting on a Loan

Student

Loan Guide

Federal Direct PLUS Loan

Parents of dependent students may apply for a Direct PLUS Loan to help pay

their child’s education expenses as long as certain eligibility requirements are

met. Graduate and professional students may apply for PLUS Loans for their

own expenses. The parent borrower must be the student’s biological or adoptive

parent. In some cases, the student’s stepparent may be eligible.

The interest rate for the 2024/25 academic year is xed at 9.08%. Interest is

charged from the date of the rst disbursement until the loan is paid in full.

The parent will pay a fee of 4.288% of the loan amount, deducted

proportionately each time a loan disbursement is made.

Private Alternative Loans

Private loans can provide supplemental funding when other free aid and federal

loans does not cover costs. These loans are credit based, offered by banks,

other nancial institutions, and schools. Parents and students applying for this

type of loan may generally require a cosigner. Be sure to apply at least 30 days

prior to the tuition bill deadline to ensure adequate time for approval and

processing timelines as required by the Truth In Lending Act. Examples of

private loan lenders are:

• State-sponsored lender New Jersey Higher Education Student

Assistance Authority (HESAA)

• Non-Prot banks or lenders

• For-Prot banks or lenders

Federal Parent and Alternative Loans

Student

Loan Guide

Federal Parent and Alternative Loans

Fixed Interest vs. Variable/Adjustable Interest Rates

Fixed interest rate student loans offer the student the opportunity to lock into a

certain interest rate until the end of the loan, except if the borrower chooses to

renance the loan. This interest rate won’t change and will not uctuate based

on the activity of the market. If interest rates increase, then you won’t have to

make higher payments. If rates fall, your loan won’t be affected and your

monthly payments will remain the same.

A lot of student borrowers believe that a xed interest rate allows them to afx

a number within their monthly budget without any surprises when it comes

time to make their student loan payment. In the event a borrower is facing

nancial difculties, a xed-interest rate student loan could make the difference

in whether they are able to pay the student loan, in addition to other expenses,

in order to achieve their nancial goals.

Variable interest rate student loans are constantly adjusted according to the

interest rates that are applicable in the current interest market place. These

rates directly depend on the activity of the nancial sector. Simply explained;

when the rate in the economy goes down, a lower interest rate is applied on the

student loan. But this process works both ways; when the rate in the economy

goes up, a higher interest rate is charged on the student loan, which signies

that the monthly required payment will increase. If you are considering a

variable rate loan, understand that rate changes may not be in the borrower’s

Student

Loan Guide

favor and could result in an increased monthly payment. When choosing a

variable interest rate student loan, read all the ne print to see how often the

rate is adjusted. Keep in mind that the monthly payments will be higher as a

consequence of an increase in the interest rate. Although lenders do their best

to keep the payments around the same amount per month, increases in the Rate

Index may leave them no option but to raise the amount of the monthly payment.

The choice between a xed or variable interest rate is a personal one and

borrowers need to look at their current nancial situation as well as what their

future nancial goals are and choose which option is best for them.

Private Student Loans

Private student loans are consumer loans made to individuals to help pay for

college. They are provided by for-prot and nonprot lending organizations and

are not backed by the federal government. Private student loans are designed

to supplement, not replace, other nancial aid sources to ll funding gaps. Only

borrow what is needed to cover the college or university educational expenses.

Work with the nancial aid ofce at your school to look into sources of federal,

state and/or school aid prior to getting a private student loan. If you have already

done this and are still unable to cover your expenses, a private student loan may

be a good option. Some private student loans require a cosigner (a person who

promises to become legally responsible to pay your debt if you fail to do so).

Generally, they are less expensive than unsecured consumer credit (such as

credit cards). If a private student loan is required, do not wait until a tuition bill

is due to apply for one because it may result in less favorable terms and

conditions.

Some programs allow borrowers to delay payments during school and offer

hardship deferments during repayment. These options often increase the total

amount paid, because interest charges will accrue during deferment periods.

Read all material provided by the lender, and ask about things you don’t

understand. Most private student loans are made by responsible lenders—and

all are regulated by consumer credit laws. Get to know the lender prior to

borrowing because the relationship with them will be a long-term one. Visit the

Better Business Bureau at www.bbb.org, ask the nancial aid ofcer and talk

to others who have worked with the lender to make an informed decision.

Federal Parent and Alternative Loans

Student

Loan Guide

State of New Jersey Standard NJCLASS Family Loan Program

NJCLASS is an affordable supplemental student loan program and is an

alternative to the Federal PLUS loan. The Standard NJCLASS Loan is available

to New Jersey residents attending an approved school (in or out-of-state) and

out-of-state residents enrolled in an approved NJ-based school. New Jersey

requires that you le the FAFSA rst to receive any State, federal, and

institutional aid. Be sure to apply at least 30 days prior to your tuition bill

deadline to ensure adequate time for approval and processing timelines as

required by the Truth In Lending Act. NJCLASS may be used for school-related

expenses including tuition and fees, books, supplies, and room & board.

Standard NJCLASS Loan

A Family Loan for Higher Education

Student

Loan Guide

Standard NJCLASS Loan Features:

• Choice of repayment options and no prepayment penalties

• Student can be a party to the loan

• Borrow only the amount you need for college – after all your other eligible

grants and federal loans are considered

• Most repayment plans offer lower fees and interest than Federal Parent

PLUS Loan*

* See page 38 for a comparison of NJCLASS and Federal PLUS loans and visit

www.njclass.org for more information on full terms and conditions. All loan

options are limited and subject to availability.

Note: For student beneciaries rst applying for an NJCLASS loan on or after May 15, 2023 the

total NJCLASS loans borrowed for each student may not exceed $187,663. This is an aggregate

per student loan limit, which will be increased annually for each academic year over the prior

year by the regression-based index value of the Higher Education Price Index. The loan limit

does not apply to students who have previously received NJCLASS loans or who applied for

their current loans prior to August 8, 2017.

Academic Year 2024-25 Rate Options

NJCLASS Repayment Information

• Deferments are available

• The minimum monthly loan repayment is $50

• No prepayment penalty

• Principal interest repayment starts 30 days after leaving school for borrowers

who deferred payments while in school or who made interest only payments

while in school.

PLEASE NOTE: Deferment must be authorized by submitting documentation toHESAA

that establishes eligibility. See www.njclass.org for appropriate “Relief Options”, forms,

and instructions.

Standard NJCLASS Loan

Option 2

15 - Year

6.99%

Fixed Rate

Payments of

interest

while in school

Option 3

20 - Year

7.99%

Fixed Rate

Full deferral

until out

of school

Option 1

10 - Year

5.99%

Fixed Rate

Payments of

principal and interest

while in school

*Addional .25% interest rate reducon with an automac recurring monthly repayment plan of

principal and interest. Subject to the availability of funds. www.njclass.org

Student

Loan Guide

Affordable Repayment Options

Repayment Assistance Program (RAP) and

Household Income Affordable Repayment Plan

(HIARP). These two programs work in tandem to

assist families facing nancial hardships by

providing reduced monthly payment amounts,

and with respect to HIARP, extended time to repay

loans. Details, eligibility, and application informa-

tion are listed online at:

www.hesaa.org/Pages/RAPandHIARPInfo.aspx

ReFi

Approved loans: Federal Parent Plus, Private Bank

Education Loans, NJCLASS - NJCLASS ReFi

program can move you closer to being debt-free

by renancing your debt into a single, more

manageable monthly payment. Fixed rates starting

at 5.99% APR 10-year loan or a 15-year loan starting at 6.75 % APR. Borrowers

can now save thousands of dollars by lowering their interest rates and avoiding

origination fees.

Repayment Assistance Program

Standard NJCLASS Loan

Student

Loan Guide

Standard NJCLASS Loan

NJCLASS Fixed Rate Loan Program Repayment Option Examples

Know Your Loan Options

If you have to borrow for your

education, be sure you have

the information to make an

informed decision.

Student must take eligible

federal loans rst

10 -Year Term

Immediate Repayment*

Fully repay your loan within 10 years.

Begin making payments of principal and

interest within 60 days of disbursement.

15-Year Term Monthly

Interest Only*

Repayment

Make monthly payments of interest only

while in school.

20-Year Term

Full Deferment*

While in School

Begin making payments of principal and

interest after no longer enrolled at least

half-time.

Loan Amount Borrowed $16,000.00 $16,000.00 $16,000.00

Interest Rate APR 5.99% 6.99% 7.9 9 %

Repayment Period 10 Yrs 15 Yrs 20 Yrs

Monthly Payment while

in school

$178.43 $93.84 0.00

Monthly Payment after school $178.43 $175.45 $200.82

Total Cost to Borrower $21,265.00 $22,893.00 $38,594.00

Amount I can save by making

payments while in school

compared to the 20 Year

Fixed Rate Deferred Option

$17,3 2 9.00 $15,701.00 $0.00

NJCLASS Administraon Fee:

These esmated payment amounts are based upon a single loan disbursement using the date funds are required you provided above. The esmated payment amounts reected

here may vary from the repayment informaon later disclosed due to changes in the approved loan amount, actual disbursement amounts and dates, and graduaon date.

Facts to Consider:

* Interest accrues from the date of disbursement. Interest that is not paid is capitalized (added to your loan balance) annually. That means interest will accrue on that higher

principal balance in the following year(s). This will increase your monthly payments and the total amount you have to repay.

Student

Loan Guide

NJCLASS Consolidation Loan

The NJCLASS Consolidation Loan is designed to assist those borrowers with

higher NJCLASS debt balances by providing a longer repayment term and lower

monthly payments. A consolidation loan may help make payments more

manageable for some borrowers by combining several NJCLASS loans into one

loan with one monthly payment.

ReFi

Loan Consolidation Loan

Loans

Included

NJCLASS, Federal Parent

PLUS, Private Educational

Loans

NJCLASS

Repayment

Term

10 or 15 Year

25 years for balances

between $30,000

and $60,000

30 years for balances of

$60,000 or more

Interest

Rate

10-Year: 5.99%

15 -Year: 6.75%

Weighted average of

underlying loans minus 0.50%

Standard NJCLASS Loan

Student

Loan Guide

Tips on Applying for a Loan

1. Exhaust all other sources of funding before looking for a private (last

resort) loan. Complete the FAFSA. Be sure to pursue scholarships, federal

grants, work-study, and federal or State loan programs before applying for a

private loan. Some State loans require you to exhaust all eligible federal aid

rst. Why? Federal loans typically carry lower xed interest rates and often

offer more exible repayment options.

2. Find a cosigner. Identify a creditworthy cosigner such as a parent, who is

willing to undertake the responsibility to increase the probability of having

your loan approved. Some lenders require a cosigner while others indicate

that over 90% of their loans have a cosigner on the application. Without a

cosigner, a private loan will be extremely difcult to obtain and even if the

borrower is approved, many lenders charge higher interest rates without a

credit-worthy cosigner.

3. Evaluate the alternatives. Review your school’s list of preferred private

loan lenders (if available). Student Lending Analytics also provides the SLA

Student Loan Ratings to assist in nding the best private student loan. Be

aware that obtaining a private loan requires a credit approval and certain

lenders may restrict their lending activities to certain types of institutions or

regional areas. Check the eligibility with lenders before applying.

4. States have supplemental loan programs you may want to consider.

New Jersey offers supplemental loans to New Jersey residents attending an

approved school (in or out-of-state) and out-of-state residents enrolled in an

approved NJ-based school. Be sure to evaluate the program for other States

on each state’s website for eligibility, interest rates and loan terms. Compare

the state’s program with other alternatives. Be aware that many of these

programs have limited funds available, so be sure to apply early.

5. Consider local credit unions. With conservative nancial management,

credit unions have largely avoided the past problems that aficted the U.S.

banking system. If the borrower is a member of a credit union or belongs to an

afnity group that would qualify them for membership in a credit union, check

out their private student loan offerings.

6. Understand the interest rate. Interest rates are different. There are

xed-rate loans that are the same for the entire term and variable-rate loans

Resources

Student

Loan Guide

that adjusts on a quarterly basis. Many private student loans consist of an

Index (LIBOR or Prime Rate) and a Margin (e.g. +5%). To determine the

starting interest rate of the loan, determine the lender’s current Index and

add the Margin. Be aware that almost all private loans are variable rate loans,

which means that rates are adjusted monthly or quarterly and will go UP over

the life of the loan. Historically, expect the average interest rate on a private

loan may be 2–3% higher than the starting interest rate.

7. Select the best repayment option for your nancial situation:

• Want to save thousands of dollars in loan costs? Make interest payments

while in school. To make interest payments notify the lender that you would

like to receive statements while in school.

• Can’t make payments while in school? Be sure the lender (not all do) offers an

in-school deferment option, which will allow borrowers to postpone payments

until after graduation. There may be a higher

interest rate charged for this deferment.

• Want to have the lowest monthly payment? Know the standard loan term

offered by the lender. The longer the term, the lower the monthly payment but

the more interest will accrue over the life of the loan. Remember, despite

having standard terms of 15-20 years, borrowers always have the option to

pay off their loan sooner without penalty.

8. All private loans NEED TO BE PAID BACK. Like federal student loans,

private loans may not be dischargeable in bankruptcy so be sure to borrow

responsibly and not beyond what you can reasonably expect to paid back.

9. Read the Promissory Note. Inside the loan document there may be a clause

that allows a lender to raise your interest rate by 2-3% if the borrower is late

on one payment.

10. Having second thoughts…you can always cancel the loan if you

move quickly enough! Review the Promissory Note closely to determine

the loan cancellation requirements, in terms of the timing and the steps

necessary to cancel a loan.

Top 10 Tips Information, adapted from: Student Lending Analytics:

SLA Guide to Private (or Alternative) Loan

Resources

Student

Loan Guide

How to Determine Your Estimated Monthly Payment

The following pages are designed to help you estimate how much a monthly

payment might be before you take out a loan. There are really three determining

factors: amount borrowed, terms of the loan, and the interest rate.

Amount Borrowed

: Based on how much is needed, locate the loan amount at

the top of the chart. Based on the total loan amount, refer to the corresponding

pages: $5,000 (pages 28 and 29), $10,000 (pages 30 and 31), $20,000 (pages

32 and 33), $25,000 (pages 34 and 35), and for $30,000 (pages 36 and 397)

Terms of the Loan

: How many years will you have to repay the loan? For

example, will you opt to pay back your loan over 20 years? Maybe you plan to

make larger payments and pay off the loan within 5 years? Various terms are

listed on each page.

Interest Rate

: The interest rate is what you agree to before signing

a loan. Once you know your rate, locate it on the page where your loan amount

and term are located.

Payment

Where all three loan factors intersect, you will see your

estimated monthly payment.

3 4

Resources

Student

Loan Guide

$5,000 Loan Amount Requested, Estimated Monthly Payment Amount & Total Balance to Repay

TERM TERM

Sample

Interest

Rate

10 Year 15 Year 20 Year 30 Year

Monthly Payment

Amount

Total to

Repay

Monthly Payment

Amount

Total to

Repay

Monthly Payment

Amount

Total to

Repay

Monthly Payment

Amount

Total to

Repay

4.00% $50.60 $6,074.70 $36.95 $6,6 5 7.15 $30.30 $7,272.00 $23.85 $8,593.42

4.50% $51.80 $6,218.30 $38.20 $6,884.90 $31.65 $7,596.00 $25.30 $9,12 0.30

5.00% $53.04 $6,364.01 $39.50 $7,117.10 $33.00 $7, 9 2 0 . 0 0 $26.80 $9,662.75

5.50% $54.25 $6,511.6 0 $40.90 $7,3 5 3.75 $34.40 $8,256.00 $28.40 $10,220.20

6.00% $55.50 $6,661.25 $42.20 $7,594.70 $35.80 $8,592.00 $30.00 $10,791.90

6.50% $56.79 $6,820.47 $43.60 $7,8 3 9. 9 5 $ 37. 3 0 $8,952.00 $31.65 $11, 377. 20

7.0 0 % $58.05 $6,966.50 $44.95 $8,089.45 $38.75 $9,300.00 $33.25 $11,975.4 5

7.5 0 % $59.34 $7,10 3. 2 2 $46.35 $8, 3 43 .10 $40.30 $9,672.00 $34.95 $12,585.85

8.00% $60.65 $7,279.65 $ 47.75 $8,600.55 $41.80 $10,032.00 $36.70 $13 , 207.10

8.50% $62.05 $7, 43 9.17 $49.15 $8,858.75 $43.40 $10,416.00 $38.50 $13,830.50

9.00% $63.35 $7,6 0 0. 5 5 $50.55 $9,116.95 $45.00 $10,800.00 $40.30 $14,453.90

9.50% $64.68 $ 7,76 5 . 2 0 $51.95 $9,375.15 $46.60 $11,184.00 $42.10 $15,077.30

10.00% $66.00 $7,9 2 9 . 6 0 $53.35 $9,633.35 $48.25 $11,58 0.0 0 $43.90 $15,700.70

10.50% $67.4 5 $8,0 9 6.10 $54.75 $9,891.55 $53.30 $12,792.00 $45.70 $16,324.10

11.0 0% $69.02 $8,264.35 $5 6.15 $10,149.75 $51.60 $12,384.00 $ 47.5 0 $16 , 9 47. 5 0

11.5 0% $70.61 $8,432.95 $ 57. 5 5 $10 , 4 07. 9 5 $53.30 $12,792.00 $49.30 $17, 5 70.9 0

12.00% $71.67 $8,609.23 $58.95 $10,666.15 $55.05 $13,212.00 $ 51.10 $18,194.30

12.50% $72.86 $8,783.55 $60.35 $10,924.35 $56.80 $13,632.00 $52.90 $18,817.70

13.00% $74.30 $8,944.20 $61.75 $11,182.55 $58.60 $14,064.00 $54.70 $19,4 41.10

13.50% $76 .10 $9,063.84 $ 63 .15 $11,4 40.75 $60.35 $14,484.00 $56.50 $20,064.50

14.00% $ 7 7. 9 0 $9,18 3.48 $64.55 $11,69 8.95 $62.20 $14,928.00 $58.30 $ 2 0,6 87. 9 0

14.50% $79.70 $9, 3 0 3.12 $65.95 $11, 9 57.15 $64.00 $15,360.00 $6 0.10 $21, 311.3 0

15.00% $81.50 $9,422.76 $ 6 7. 3 5 $12,215.35 $65.85 $15,804.00 $61.90 $21,934.70

15.50% $83.30 $9,542.40 $68.75 $12,473.55 $6 7.70 $16,248.00 $63.70 $22,558.10

16.00% $83.75 $10,050.80 $70.15 $12,731.75 $69.55 $16,692.00 $65.50 $23,181. 5 0

16.50% $85.30 $10,238.55 $71.55 $12,989.95 $71.45 $17,14 8.0 0 $ 6 7. 3 0 $23,804.90

17.0 0 % $86.85 $10 , 427.8 5 $72.95 $13 , 248.15 $73.35 $17,6 0 4.0 0 $6 9.10 $24,428.30

17.5 0 % $88.50 $10,618.75 $74.35 $13,506.35 $75.25 $18,060.00 $70.90 $25,051.70

Resources

Student

Loan Guide

$5,000 Loan Amount Requested, Estimated Monthly Payment Amount & Total Balance to Repay

TERM TERM

Sample

Interest

Rate

10 Year 15 Year 20 Year 30 Year

Monthly Payment

Amount

Total to

Repay

Monthly Payment

Amount

Total to

Repay

Monthly Payment

Amount

Total to

Repay

Monthly Payment

Amount

Total to

Repay

4.00% $50.60 $6,074.70 $36.95 $6,6 5 7.15 $30.30 $7,272.00 $23.85 $8,593.42

4.50% $51.80 $6,218.30 $38.20 $6,884.90 $31.65 $7,596.00 $25.30 $9,12 0.30

5.00% $53.04 $6,364.01 $39.50 $7,117.10 $33.00 $7, 9 2 0 . 0 0 $26.80 $9,662.75

5.50% $54.25 $6,511.6 0 $40.90 $ 7, 3 5 3 .75 $34.40 $8,256.00 $28.40 $10,220.20