The determination of default is different depending on whether you have a federal, NJ CLASS, or private loan.  Private loans are usually pretty strict (missing one payment), but it is determined by the terms of the promissory note.  Federal is fairly liberal, but don't expect the same from the State of New Jersey.

In general, default occurs when you fail to make a payment when due, or to meet other terms of the note.  This must be done "under circumstances where (HESAA) finds it reasonable to conclude that the borrower no longer intends to honor the obligation to repay."  But what does that mean?

How Far Behind Do I Have to Be?

It can mean different things depending on how often payments are due.  It is where the failure to repay persists for:

  • At least 180 days when payments are due monthly; or
  • At least 240 days during the period of time you are in school and payments are due less frequently (usually quarterly)

So, either six (6) monthly payments behind or 8 months if you are in school.

What Can Happen Once I Default?

Default on an NJ CLASS loan is very serious, and not fixable as with a federal loan.  Many bad things can happen to you, including:

  • Seizure of your NJ Tax Refund
  • Garnishment of your wages
  • A lawsuit against you and your cosignor resulting in levies, including on your bank accounts.

In addition to this there is the potential suspension of a professional license, so doctors, lawyers, and teachers need to be cautious. Plus, you can never get a CLASS loan again.

What Can I Do?

If you live in southern New Jersey and are being sued on an NJ CLASS loan, 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 how to handle it.

If you would like more information about student loans, you can download my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.

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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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