Unlike federal student loans, where you can opt for a repayment plan after you finish school (and even change it multiple times after that), New Jersey's CLASS student loans set the repayment plan at the time you apply for the loan. In fact, applications cannot be processed until a repayment option is selected.
There are three repayment options, and the Higher Education Student Assistance Authority (HESAA) will "make its best effort, based on available funding, to offer you the repayment option you selected." If the selected option is unavailable the loan offer will include the most similar available repayment option.
What Are My Options?
The three repayment options for an NJCLASS loan are:
- You begin to pay the principal and interest of the loan on a monthly basis within 60 days after the loan is first disbursed. 15 year repayment term.
- You 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. 15 year repayment term; or
- You are not required to pay principal or interest until graduation, withdrawal or notification of less than half-time enrollment (basically, an in-school deferment). Once one of these circumstances occurs, the loan reverts to a repayment schedule as set forth in option 1. Interest accrued from the date of loan disbursement is also deferred and capitalized (added to principal) on a quarterly basis for loans originated before June 9, 1997, and on an annual basis for loans originated on or after June 9, 1997. The first monthly payment of principal and interest must be made within 60 days after the reversion date. 20 year term.
There is a price, however, for options 2 and 3. In exchange for deferring both principal and interest or principal only, you pay a higher interest rate on the loan.
Think Hard Before Choosing
Although I do not recommend New Jersey's CLASS loans when other options are available (e.g. federal PLUS loans), if you are going to do it, be sure to pick the payment plan you know you will be able to live with, both while you are in school and after you graduate.
If you live in southern New Jersey and would like to consult with me on your loans, please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your case.
If you would like more information about student loans, you can dowload my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.
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