New Jersey-2010-A4095-Introduced

An Act establishing a Retaining Our Best and Brightest Loan Redemption Program and supplementing chapter 71C of Title 18A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the "Retaining Our Best and Brightest Loan Redemption Program Act."

2. The Legislature finds and declares that:

a. Maximizing the number of educated individuals within the State's workforce is a prudent means of ensuring that New Jersey remains economically competitive in the 21st century. Currently, 46.6% of the State's workforce has graduated from an institution of higher education. However, a recent study by the Georgetown University Center on Education and the Workforce found that by 2018, 66% of New Jersey jobs will require some form of postsecondary education.

b. The State invests heavily in its elementary and secondary school students and produces many academically successful high school graduates, with over 80% going on to attend an institution of higher education. New Jersey does not always reap the benefits of that investment, as many of New Jersey high school graduates elect to attend out-of-State institutions of higher education. According to the National Center for Education Statistics, 37,201 of New Jersey's high school graduates left the State to attend an institution of higher education in 2008, while only 5,557 came to New Jersey from other states. Furthermore, many of those who remain in the State to attend an institution of higher education elect to move out-of-State upon graduation.

c. Each student who elects to attend an out-of-State institution of higher education and fails to return to the State upon graduation, or who attends an in-State institution of higher education but leaves upon graduation, represents an enormous economic loss to the State. Therefore, it is appropriate for the State to offer incentives to graduates of New Jersey institutions of higher education to remain in the State after graduation, and to citizens of New Jersey who attend out-of-State institutions of higher education to return to New Jersey upon graduation.

3. As used in this act:

"Authority" means the Higher Education Student Assistance Authority.

"Eligible NJCLASS loan" means a loan issued by the authority under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program pursuant to N.J.S.18A:71C-21; provided that (1) the loan has not had a portion of its interest or principal redeemed through the program for more than 60 months; (2) the repayment plan for the loan requires at least 180 monthly payments to fully repay the loan; (3) and provided further that no loan shall be an eligible NJCLASS loan after 10 years from the first date of loan disbursement.

"Full-time" means 35 hours of work or more per week for a single employer or a total of 35 hours of work or more per week for multiple employers.

"Monthly billing cycle" for a given monthly payment means the period of time starting with the day after the previous required monthly payment was due and ending on the due date of the given payment.

"Monthly student loan repayment obligation" means the sum of the minimum required monthly payments for all of a person's qualifying student loans, minus any assistance received by an applicant or a participant through any public or private student loan assistance program. Only qualifying student loans that are (1) in repayment, and (2) subject to a repayment plan that requires the lowest allowable minimum monthly payment shall, as determined by the authority, be used to calculate a person's monthly student loan repayment obligation.

"NJCLASS loan" means any loan made under the New Jersey College Loans to Assist State Students (NJCLASS) Loan program pursuant to N.J.S.18A:71C-21.

"Participant" means a person who meets all the criteria established in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) and is enrolled in the program.

"Program" means the Retaining Our Best and Brightest Loan Redemption Program established pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill).

"Public service employee" means an individual employed by a federal, state, or local government organization or an instrumentality thereof; an organization organized as a not-for-profit as described in section 501(c)(3) of the federal Internal Revenue Code of 1986, 26 U.S.C. s.501, and exempt from taxation under section 501(a) of the federal Internal Revenue Code of 1986, 26 U.S.C. s.501; a private organization that is a not for profit business, a labor union, a partisan political organization, or an organization engaged in religious activities, unless the qualifying activities are unrelated to religious instruction, worship services, or any form of proselytizing, and that provides any of the following public services: emergency management, military service, public safety, law enforcement, public interest law services, early childhood education, public service for individuals with disabilities and the elderly, public health, public education, public library services, and school library or other school-based services.

"Qualifying student loan" means a government or commercial loan for the actual costs paid for tuition and reasonable education and living expenses relating to the obtaining of an undergraduate or graduate degree.

4. a. There is established within the Higher Education Student Assistance Authority the "Retaining Our Best and Brightest Loan Redemption Program." The program is designed to provide for the redemption of a portion of the NJCLASS loans of program participants. No individual shall receive more than 60 months of assistance under the program.

b. The authority shall, on a monthly basis, provide loan redemption in the amount of 15% of the required minimum monthly payment for the participant's eligible NJCLASS loans, provided that the participant remains eligible under the criteria established in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) for the duration of the previous monthly billing cycle. If a participant in the program is a full-time public service employee, the authority shall, on a monthly basis, provide loan redemption in the amount of 20% of the required minimum monthly payment for the participant's eligible NJCLASS loans, provided that the participant remains eligible under the criteria established in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill) and is a full-time public service employee for the duration of the previous monthly billing cycle.

c. Participants shall be enrolled into the program for a period of time equivalent to the participant's next twelve monthly billing cycles for NJCLASS loans or for 13 calendar months, whichever period is shorter.

5. a. To be eligible to participate in the program, an applicant shall:

(1) Reside and maintain domicile in New Jersey;

(2) Be employed full-time within the State;

(3) Have graduated with a cumulative grade point average of 3.0 or higher on a scale of 4.0, or its equivalent, from an eligible institution. The cumulative grade point average shall be applicable to an undergraduate program or graduate program, or to each, depending on the program for which the NJCLASS loan was issued.

(4) Have an annual income of $75,000 or less; and

(5) Have a monthly student loan repayment obligation equivalent to 20% or more of the applicant's total gross monthly income.

b. A participant must be in compliance with all of the eligibility criteria established in subsection a. of this section for the duration of each monthly billing cycle.

6. a. A person may apply to the authority to participate in the program in such manner as prescribed by the authority.

b. As part of the program application, the authority shall require each applicant to submit documentation including, but not limited to, the applicant's most recent New Jersey gross income tax return.

c. The program application shall contain a provision requiring the applicant to agree to notify the authority, in writing, of any change in circumstances that may render the person ineligible to participate in the program.

d. A participant shall reapply annually to continue participation in the program in such manner as prescribed by the authority.

7. a. A program participant shall enter into a written contract with the authority to participate in the program. The contract shall specify the amount of eligible student loan expenses to be redeemed by the State each month and that the participant is eligible to receive loan redemption for one year following acceptance into the program, unless the participant reapplies to the program and the authority renews the participant's written contract for another year.

b. A program participant who has entered into a redemption contract with the authority may nullify that contract by submitting written notification to the authority and assuming full responsibility for repayment of the full amount of the participant's loan or that portion of the loan that has not been redeemed by the State in return for partial fulfillment of the contract.

c. The authority may nullify a contract it has entered into with a program participant if the participant fails to remain in compliance with the program criteria established in section 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).

d. In the case of a program participant's death or total or permanent disability, the authority shall nullify the service obligation of the participant, thereby terminating the participant's service obligation; or where continued enforcement of the contract may result in extreme hardship, the authority may nullify or suspend the participant's service obligation.

8. The authority shall increase the interest rate charged to all NJCLASS borrowers equally in order to recoup the total amount spent on redeeming loans through the program.

9. This act shall take effect immediately, but sections 1 through 7 shall be inoperative until the first day of the nineteenth month next following the date of enactment and shall be applicable only to NJCLASS loans issued pursuant to N.J.S.18A:71C-21 on or after that first day. The authority may take such anticipatory administrative action in advance of that first day as shall be necessary for the implementation of this act.

STATEMENT

This bill establishes a "Retaining Our Best and Brightest Loan Redemption Program." The program is designed to offer incentives to encourage academically successful graduates of New Jersey colleges and universities to remain in the State upon graduation, and to academically successful New Jersey residents who attend out-of-State colleges and universities to return to the State upon graduation. The purpose of the program is to increase New Jersey's economic competitiveness in the 21st century by increasing the percentage of educated individuals within the State's workforce, making the State a more attractive place for existing New Jersey businesses and potential new employers.

Under the program, the Higher Education Student Assistance Authority ("HESAA") will redeem up to 20% of the required minimum monthly payment on an graduate's eligible NJCLASS loan, provided that the participant remains compliant with the program's eligibility criteria for the duration of previous the month.

In order to be eligible to receive loan redemption under the program an individual must be a resident of the State and a domiciliary of the State. The individual must work full-time, or the equivalent of full-time for multiple employers, within the State. The individual must have graduated with a 3.0 GPA, or its equivalent. The individual must also have an annual income of no more than $75,000 and must be obligated to pay a minimum of 20% of his or her gross monthly income toward the discharge of student loans.

In order to be eligible for redemption, the student to whom the NJCLASS loan was made must not have received more than 60 months of assistance under the program and the loan must: (1) have been issued after the program becomes operable; (2) not have had 120 required monthly payments made toward it; and (3) be on a repayment plan requiring at least 180 monthly payments.

The cost of providing this program to NJCLASS borrowers shall be built into the interest rate charged to all NJCLASS borrowers.