I get this question a lot from frustrated people trying to get an affordable payment on their student loans. This confusion comes from all we hear about federal loans and the ability to negotiate a payment plan that tracks with income. But the problem is . . .

New Jersey CLASS loans from HESAA don't have Income Driven Repayment (IDR) Plans.

This creates a double whammy because these loans also have the same protections from bankruptcy discharge as federal loans, but with none of the repayment plans!

The HESAA Loan Payment Catch 22

The reason why HESAA doesn't negotiate is because . . . why should they? If your loan is current, then you can obviously afford the payments, so why should they agree for less? If you're behind a couple of months, they may put you into a temporary forbearance, thinking that your inability to pay is also temporary.

In addition, these loans are no different than a mortgage, car loan, or personal loan, in which you borrow money to be repaid over an agreed-upon term at an agreed-upon interest rate. Those lenders don't work with you on an affordable payment, so why should HESAA? The only real difference is that you can't discharge the debt in bankruptcy like a personal loan or mortgage.

The HESAA Loan Repayment Irony

But do you know when HESAA will work with you on an affordable monthly payment? If you are in default on the loans!

Yes! Defaulting on the loans is the fastest and best way to get an affordable payment! Now, I'm not advising you to default on your loans; I'm just pointing out the irony.

But once the loan goes to a law firm to collect, one of the few programs HESAA has that mirrors the federal program is default rehabilitation at an affordable payment. Yes, you can get out of default once you are in it. After you get into a repayment plan and make at least 9 on-time payments, the default will be removed from your credit! Now your FICO scores won't go all the way back up because of your prior bad repayment history, but that will improve over time (1-2 years).

So What Do You Do?

Unfortunately, because HESAA doesn't negotiate absent default, there is nothing I can do for you, and you will most likely be met with a stone wall. In a way, HESAA is forcing you into default (because the payments are so unmanageable), so that they can then work with you on an affordable repayment plan that will get you out of default!

But If You Are in Default . . .

If you are in default, I can help you as long as you meet the two other criteria for me doing so. Just click this link to schedule an initial phone call to discuss your situation. Just don't wait too long to do so, as you don't want that collection law firm to levy your bank accounts or garnish your wages!

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