(TRENTON) -- Legislation sponsored by Assemblywoman Downey to combat student loan debt in New Jersey by increasing transparency for the NJCLASS student loan program was signed into law on Monday. The new law (formerly bill A-4239) revises the NJ CLASS program to require that applicants first exhaust federal student loans, conduct income verification and limit total student loan amounts.
"We want students to graduate and be able to shoot for their dreams without being hampered by years of loan repayments that hinder their productivity," said Downey (D-Monmouth). "These changes will make the state's higher education authority a stronger advocate for our students."
The new law makes three changes to the New Jersey College Loans to Assist State Students (NJCLASS) Program:
1) Require that HESAA verify the financial information reported by a borrower or cosigner on an NJCLASS loan application;
2) Mandate that HESAA deduct the maximum amount of federal direct subsidized loans available to the student from the available NJCLASS loan amount when establishing the maximum annual loan amount for a student borrower. If the available interest rate for federal direct unsubsidized loans is lower than the interest rate available to the student under the NJCLASS loan program, the authority must deduct the maximum amount for federal direct unsubsidized loans available to the student from the NJCLASS loan amount; and
3) Provide that a student borrower's total loans under NJCLASS may not exceed $150,000.
The bill was approved by the Assembly, 76-0 in June. The new law takes effect immediately.