One of the first questions I ask someone calling my office about student loans is whether they are federal, state or private. This is because each classification of loans has its own set of programs and options (or in the case of private loans, lack thereof).

Sometimes they think the loan is federal because it's Navient (or Sallie Mae) even though that company has its own private loan program, or private because it's a CLASS loan from New Jersey (a College Loan to Assist State Students) administered by the Higher Education Student Assistance Authority (HESAA). To confuse things even further, HESAA is an approved servicer of federal student loans. So, the question becomes . . . 

Are HESAA's CLASS Loans Private or Federal?

The answer, unfortunately, is neither. They are not federal because they were not originated (or backed) by the U.S. Department of Education, and they are not private because they were originated by a state government. Although the CLASS loan program was originally supposed to mirror the federal system regarding programs for deferments, forbearances, debt forgiveness, default cures, and income driven repayment plans, New Jersey and HESAA have been slow to step up in this regard, so what is available for federal loans may not be available for CLASS loans.

New Jersey's CLASS loans sit somewhere in between the other two. They have more programs for borrowers when it comes to repayment or default cure, but they also have more powwerful methods to collect if you default, such as taking your state income tax refund or garnishing your wages without having to sue you. Private lenders must send the loan to a law firm to sue you, get a judgment, then find out where you work and bank to collect the money.

There Is Hope for Repaying a CLASS Loan

If you can't afford the payment on your CLASS loan, there is hope. HESAA has become much better in negotiating affordable payment plans that track with your income. In addition, they will discharge the loan if the borrower dies or becomes permanently disabled, and will cure the default on loans once certain requirements are met. In this way, they are much better than private loans, although not as robust as the federal ones.

Need Help with Your NJ CLASS Student Loans?

So, as you can see, New Jersey government backed student loans from HESAA do offer advantages over private ones that can help you if you're struggling with paying them. If you live in 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 to discuss your case. Put my experience to work for you!

If you would like more information about student loans, you can dowload my free books, I Graduated; Now What? A Guide to Dealing with Your Student Loans and Paying for Your Classes with a CLASS Loan: A Survival Guide to HESAA.

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.

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