Ridgewood NJ, Governor Phil Murphy today signed A1181/S2054 to make the completion of a financial aid application form a prerequisite to graduation for public high school and charter school students in New Jersey. Beginning with the 2023-2024 11th grade class, and for two school years thereafter, students and their guardians will be required to complete and submit either the Free Application for Federal Student Aid (FAFSA) or the NJ Alternative Financial Aid Application, as guided by the Higher Education Student Assistance Authority (HESAA), in order to receive their high school diploma. The information on a student’s financial aid application is used to notify them of any financial aid they are eligible to receive if they pursue a postsecondary education.
At 9.1 percent, New Jersey’s default rate is 11th in the country, particularly good news given that students tend to carry a heavy debt burden.
Students from New Jersey’s colleges and trade schools default on their federal loans at a relatively low rate overall, although the proportion of defaults exceeds the national average at four of 10 schools.
This news comes as a package of bills designed to help New Jersey students — particularly those who borrowed through the New Jersey Higher Education Student Assistance Authority — deal with loan repayment problems and the high cost of college in general awaits further action in the Legislature.
Data from the website Student Loan Report put the state’s default rate at nearly 9.1 percent, the 11th lowest in the nation for borrowers who had to begin repayment in the 2013 fiscal year, the most recent year for which data is available because the U.S. Department of Education uses a three-year period to define defaults. Of nearly 90,000 students who borrowed money while at a New Jersey school, 8,153 were in default, defined as nine months of nonpayment.
The national default rate was 11.3 percent, a drop from 11.8 percent the previous year and the third year in a row of declines, from 14.7 percent in 2010. Nationally, more than 5.2 million borrowers entered repayment status in 2013 and nearly 600,000 of them have defaulted.
One reason for the state’s relatively low default rate could be that many students take out New Jersey College Loans to Assist State Students loans through HESAA. According to the authority’s 2015 annual report, it distributed more than $163 million for 10,686 students in and out of state that fiscal year. According to the Institute for College Access and Success, New Jersey is one of three states — the others are Texas and Minnesota — with significant state student loan programs.
As New Jersey senators came down on the state’s college loan program, Financial Planners stress the importance of developing a strategy early.
August 23,2016
the staff of the Ridgewood blog
Ridgewood NJ, After an article in the New York Times that detailed one family’s nightmare in dealing with their son’s death and his student loans through the Higher Education Student Assistance Authority (HESAA), New Jersey State Senators heard testimony on the program, which some have called “predatory” and “loansharking.”
“My own experience was very similar even in 1980 student loans we a scam and students were not provided with proper accurate information to make a rational financial decisions” the Ridgewood blog Founder James Foytlin
Financial Planning Association of New Jersey (FPANJ) Advocacy Chairman John Crosby was also in attendance in Trenton. He has counseled clients in similarly tough situations with HESAA. The program has been characterized with extraordinarily stringent rules that can easily lead to financial hardship. Loan repayments cannot be adjusted based on income, and few breaks are given for unemployment or other hardship.
“While there were no representatives from HESAA present, a letter from Executive Director Gabrielle Charette was submitted for testimony. I’m happy to say that things will be forced to change,” Crosby said. The testimony led to a unanimous vote by the higher education committee to approve S-743, which would require HESAA to forgive the student loan of someone who dies before completely repaying it, as the federal government does.
The experience with HESAA for many families is in stark contrast to Francis Astorino’s. His diligence in planning for college with his family began early, especially as his triplets eyed college with another already enrolled. A CFP® and President of The Astorino Financial Group, he recalled the struggle to put himself through school, and didn’t want the same burden for his children. He said it still took a lot of discipline and sacrifice to fund college for his four children, and it had to be a family decision.
“We put our kids to work early as early teens, helping in the office. And at about 16 years of age we sat them down and showed them the file with their balance sheet,” Astorino said. “However nice it was to say we could send our kids anywhere, we wanted them to know we weren’t going to fund their lifestyle, because we thought it was important that they had some skin in the game.”
Crosby said, “The key takeaway I get from both of these stories is how incredibly important it is – whether or not you’ve planned early – to have a CFP® Professional there. It goes beyond building wealth…it really is about protecting your home, your family and your livelihood.”
ABOUT FPA of New Jersey and FPA:
Financial Planning Association of New Jersey is part of The Financial Planning Association® (FPA®). FPA connects those who need, support and deliver professional financial planning. FPA believes that everyone is entitled to objective advice from a competent, ethical financial planner to make smart financial decisions. FPA members demonstrate and support a professional commitment to education and a client-centered financial planning process. Working in alliance with academic leaders, legislative and regulatory bodies, financial services firms and consumer interest organizations, FPA is the community that fosters the value of financial planning, and advances the practice and profession of financial planning.
