We Can’t Pay Our NJCLASS Student Loan. What Now?

“Dear Steve,

I cosigned with my daughter for a State of NJ (NJCLASS) loan. Currently I am retired and living on social security and a small pension of $700 per month. I have no assets such as a house, savings or other tangible property. Currently Living in Phoenix AZ. My daughter is working part time since she has not been able to find a regular job in her field here in AZ. She, as well, has no assets. We have tried to work with NJCLASS but they have refused to listen. The loan has been turned over to an attorney in New Jersey. Current Loan is around $210,000 which is beyond our current means.

1. Can NJCLASS touch my Social Security and my pension?
2. What is in the process when this loan goes into default?
3. Will we need an attorney?
4. What is the max percentage amount that can be taken from my daughter’s income?
5. With the exception of the above questions, is there anything else we should be aware of.


Dear Al,

When you cosign for any loan you accept the full responsibility to repay the loan if the other borrower does not. That’s just the way these things work. Cosigners always think they are doing something generous or good for the person they help. The reality is they are just putting themselves in significant financial peril for a non-creditworthy person that lenders would not otherwise touch with a twenty foot pole.

The NJCLASS loan is NOT a federal or private student loan.

Your NJCLASS loan is part of HESAA. They are an independent State of New Jersey government branch.

I am not an attorney and you should speak with an attorney who is licensed in the state in which you currently reside for specific legal advice on your questions.

What I can offer you is some general advice.

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Your Social Security is generally off limits unless you owe a federal government student loan. If your pension is not a State of New Jersey pension, then I can’t see that being attacked either.

You describe yourself as having no assets and a limited income. While you and your daughter might be sued over the outstanding debt, it doesn’t sound like you have much, if anything, with which to pay a judgement. This is what people typically call being judgment proof. Even though you would lose if sued, they can’t go after any of your assets.

Your daughter, however, is a different matter. Since she does have the potential to work again she might have her wages garnished in the future if she is sued. But that is dependent on what state she is sued in and how much NJCLASS wants to pursue the wage garnishment later.

NJCLASS does offer some limited deferment and forbearance options but they don’t sound like they would be significantly helpful in your situation. If you enter into those you will find your balances accelerating during the period of non-payment. And these brief respites are only temporary.

Logically I can’t predict your daughter would suddenly be able to find work to satisfy repayment on $210,000 worth of NJCLASS student loans, since she can’t even find part-time work in her field.

So that leaves you both in the same difficult situation that many face. Without any real loan forgiveness programs that suit her situation, your daughter is left with the cold fact that she just may not be able to repay her loans, ever.

In that case you might want to read this article, and also be aware the loans may be dischargeable in bankruptcy after the statute of limitations has run its course.

However, because these are State debts you would have to confirm with a bankruptcy attorney there is no New Jersey statute that would exempt New Jersey backed student loans from the statute of limitations.

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I would not classify the current situation as hopeless but it is certainly challenging because your options are limited to some not wonderful choices.

Your situation is yet another classic example of well intentioned lenders passing out money and sinking students in so much debt, their degrees would never satisfy repayment.

I wish I could say your situation was unique, but sadly it is not.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode

1 thought on “We Can’t Pay Our NJCLASS Student Loan. What Now?”

  1. Deborah Your comments really hit the mark. we have been suffering under NJclass for years. My son had an in school deferrement that they took out of deferment and started billing us when i pointed this out they put it back in deferrment but said we owe what they have already billed us for. In 2008 we filed for bankruptcy this loan wasn’t even supposed to be part of the bankruptcy( my son was still in school, the loan was in deferment it wasn’t affecting our monthly bills) NJ class insisted that they must be part of the bankruptcy and asked for payment as part of the banckruptcy which messed up the whole program and undermined our ability to pay. They didn’t even realize they were already garninshing my wife wages when i tried to work with them. Worst financial experience of our lives I would never advise anyone to use them.


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