Theresa Hofmann, who holds two degrees from prestigious universities, pays more than her rent each month to cover student loans from the federal government and NJCLASS.
The Somerville, Mass., Divorce lawyer pays only about $ 300 a month to the federal government, but said her monthly payments on NJCLASS loans were $ 1,400 – after her refinancing.
“If it was just me I would probably be fine,” said Hofmann, from West Milford. “But I want to help my mother. At the moment, I have no more money.
The coronavirus epidemic has plunged New Jersey and the country into economic crisis and overturned stable industries overnight. To help those in difficulty, President Donald Trump set the interest rate on student loans held by the federal government at 0%. He also created an option that allows any borrower to apply for forbearance and suspend payments for two months, and that time frame could soon be extended to six months.
But NJCLASS loans, distributed by the Higher Education Student Assistance Authority (HESAA), are funded not by the federal government or New Jersey taxpayer dollars, but by bondholders. They offer competitive rates lower than many private lenders, and borrowers can pay them back over 10 or 20 years.
So far, they and other private loans have not been included in the relief efforts.
For attending Catholic University of America in Washington, then Boston University for law school, Hofmann, 26, still owes $ 179,472 in NJCLASS loans to himself. She graduated last May and didn’t have much time to save money while making monthly payments.
If she could take a break from NJCLASS loans for six months, she could breathe a sigh of relief knowing that she would have $ 1,700 more each month if her family needed help.
“It would be huge,” said Hofman. “That would be better than anything Congress gave me” for federal loans.
The $ 2,000 billion stimulus bill passed by the US Senate, and expected to be voted on by the House, would automatically suspend payments for any student loans held by the federal government. There was at least one American House project that included a provision that would help private loan holders, and therefore NJCLASS.
In a statement, HESAA said it “is committed to helping all borrowers, including those who need help making their payments as they face the current emergency.”
But stopping student payments on NJCLASS loans isn’t easy. Without another source of revenue, such as federal aid, the bonds would default.
The authority said it had contacted the New Jersey congressional delegation to express support for the relief of payments for NJCLASS borrowers. He said he had never charged borrowers late payment fees and would pursue this policy.
As of August last year, borrowers had 130,002 NJCLASS loans outstanding, totaling $ 1,767,981,091 in principle, according to an annual HESAA report. About 40% of borrowers come from families earning between $ 40,000 and $ 80,000 per year, the mid-middle class of New Jersey.
On March 19, HESAA and Gov. Phil Murphy said the authority would allow people directly affected by the economic downturn to apply for loan relief for temporary disability or unemployment, or relief from financial hardship.
But these efforts do not take a drastic approach like that applied to federal loans.
When asked on WCBS Radio 880-AM on Wednesday what he plans to do regarding student loan relief, Murphy said, “We are looking at this very carefully.”
He did not provide details.
Senate Speaker Stephen Sweeney also called for relief for federal government private loan borrowers, as well as a two-month hiatus on mortgage payments, home equity, loans, services public and insurance.
“Now, more than ever, we need a moratorium on HESSA student loan repayments for current students, indebted graduates and their families whose lives and finances are disrupted by the coronavirus crisis,” he said. he said in a statement on Thursday.
But he also said the state should also make it a priority by adopting a cohesive policy following federal action.
“We need to consider the impact on bondholders, but we also need to understand that these conditions can also be catastrophic for student borrowers,” he said.
Amanda Hoover can be reached at firstname.lastname@example.org. Follow her on Twitter @amandahoovernj. Find NJ.com on Facebook.
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