With the COVID-19 pandemic still keeping us at a social distance, and many of us unemployed, the student loan crisis has gotten even worse. Even though Congress gavce some relief under the CARES Act in March, many loans (including certain federal ones) were not included. One type of loan was the CLASS student loan here in New Jersey that is administered by HESAA.

But Governor Murphy has stepped up to help NJCLASS loan borrowers, which is good, but borrowers should definitely use caution in taking advantage of these solutions.

It's Really Just a Deferment or Forbearance of the Student Loan

The reason for this is that a close reading of the HESAA web site shows that these programs are nothing more than deferments and forbearances that just put the problem off until later; they don't offer any long term solutions. I have repeatedly stated that these programs are not the best solution to your student loans, and that advice hasn't changed.

You can get one of these if COVID (or any other trigger) has rendered you:

You should also know that these programs were already in existence, and are just now being touted as a relief program due to COVID. Because of this, the same "gotchas" apply.

The Downsides to HESAA's COVID Relief

The overall downside here is that it is not a long term solution. If you couldn't afford your payments before the pandemic, then these programs do nothing more than buy you some time; they don't suddenly make the loan payments affordable. So, in brief, here are the downsides:

  • The Relief is Temporary. According to the HESAA web site, these programs are good for up to 6 months. Based on your loan terms and any prior relief you may have received, this relief may be extended for an additional six month period. 
  • Your Payment Could Go Up Afterwards. Any accrued interest and unpaid principal during this period gets added on to your balance, causing your monthly payment to go up. This can be reduced if you make interest-only payments during the deferment/forbearance.

HESAA has also suspended all collection efforts on defaulted loans, so that means no wage garnishments, bank levies, or offsets of tax refunds or lottery winnings. Thus you ae safe for now, but the music will start up again eventually.

Take This Opportunity to Fix Your HESAA Loan Problem!

Instead of applying for one of these programs, why not take this opportunity to come up with a more long term solution? This pandemic and economic crisis have created a "kinder, gentler" HESAA, and they are more willing to help you than in the past. I have been successful in negotiating many affordable deals for my clients, and I may well be able to do the same thing for you.

I Can Help!

If you live in New Jersey, know you need to do something about your student loans, and are ready to take action, then call my office right away at 856-432-4113 to schedule an appointment or contact me by e-mail. You need to act now; the longer you wait, the fewer options are available!

Looking for more information? Then check out my free book, Paying for Your Classes with a CLASS Loan: A Survival Guide to HESAA. It will tell you about all of your options and which one might work for you!

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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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