One of the great features of federal student loans is that you can get a repayment plan that tracks with your income. Monthly payments can be capped to either 10% or 15% of your disposable income and adjust up or down from there over 20 to 25 years. But not everyone pays for all of college with federal loans.

But What About CLASS Loans from HESAA?

Here in New Jersey, the Higher Education Student Assistance Authority (HESAA) offers CLASS student loans to people who live, or go to school, in the state. They can be useful in covering any shortfall in the cost of attendance after federal loans and grants have been exhausted, but they don't come with many of the advantages.

People would graduate and discover that they have a huge amount of CLASS loan debt and a monthly payment that is just unaffordable. They may be able to get a forbearance or deferment while they get a job (or figure out what they are going to do), but that is not a long term solution. There are no income driven repayment plans for these loans.

Income Driven Repayment Plans a la HESAA

In 2019, Governor Murphy signed into law a bill that would allow for borrowers to get into a repayment plan that is more suited to their economic situation. After filling out a simple, one-page financial disclosure form (and attaching paystubs and tax returns), they will look to put you into a no-interest repayment plan that can stretch out as long as 30 years!

This is great, but it does have you paying for quite a long time and has tax consequences. Although there is no interest on the payment plan, it does accrue and is discharged at the end of the repayment term. This forgiven debt can be considered taxable income by the IRS!

How Do I Get In on This?

I have been very successful in negotiating these repayment deals with HESAA. If you need to get into a plan like this because you can't afford your current payment or are in default, you live in New Jersey, know you need to do something about your loans, and you are ready to take action, then call my office at 856-432-4113 to schedule an appointment. Get your CLASS loans under control!

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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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