Rabu, 31 Maret 2010

HIGHER EDUCATION STUDENT ASSISTANCE AUTHORITY

HIGHER EDUCATION

Student Loan and College Savings Programs
Federal Family Education Loan Program: Policies and Procedures; Social
Services Student Loan Redemption Program; OB/GYN Student Loan
Expense Reimbursement Program; The New Jersey College Loans to
Assist State Students (NJCLASS) Program: Policies and
Procedures; Policy Governing New Jersey Better Educational Savings Trust (NJBEST) Program
Readoption with Amendments: N.J.A.C. 9A:10
Proposed: December 1, 2008 at 40 N.J.R. 6721(b)
Adopted: April 22, 2009, Higher Education Student Assistance Authority, Maria I. Torres, Chairperson.
Filed: May 1, 2009 as R. 2009 d. , with no changes
Authority: N.J.S.A. 18A:71A-1 et seq., 18A:71B-35 through 46, 18A:71B-96, 18A:71C-
1 through 31, 18A:71C-49 and 20 U.S.C. §§1071 et seq.
Effective Date: May 1, 2009, Readoption;
June 1, 2009, Amendments.
Expiration Date: May 1, 2014
Summary of Public Comment and Agency Response
No comments were received.

Federal Standards Statement
A Federal standards analysis is not required since the rules being readopted with amendments are intended to implement the Federal statutory and regulatory requirements for the Federal Family Education Loan Program administered by the Authority in New Jersey. See the Federal Higher Education Act of 1965, as amended, and its implementing regulations set forth in 34 CFR parts 600, 668, and 682. The amendments addressing the FFEL Program explicitly limit their scope to areas where State law requires regulatory guidance, or where the Authority proposes policies and procedures that, while not exceeding Federal standards, implement those standards differently than unified industry standards set forth in the Common Manual.
A Federal standards analysis is not required for the Social Services Student Loan Redemption Program or the OB/GYN Student Loan Expense Reimbursement Program since the rules being readopted with amendments for both of these programs are not subject to any Federal requirements or standards.
With respect to the NJCLASS Program rules being readopted with amendments, a Federal standards analysis is not required because the subject matter of this State student loan program is not subject to any Federal requirements or standards except for the standards for tax-exempt bonds, section 144(b) of the Federal Internal Revenue Code. NJCLASS loans funded by tax-exempt bonds are intended to qualify under the standards of section 144(b) of the Federal Internal Revenue Code, not exceed the standards of that section.
The rules being readopted, with only one clarifying amendment, for the administration of the NJBEST Program are not intended to exceed, but rather implement, the statutory requirements for a state college savings program to receive favorable Federal tax treatment under section 529 of the Federal Internal Revenue Code of 1986, 26 U.S.C. §529 and are consistent with administrative guidance from the Internal Revenue Service. Therefore, a Federal standards analysis is not required.
Full text of the readoption may be found in the New Jersey Administrative Code at N.J.A.C. 9A:10.
Full text of the adopted amendments follows:
SUBCHAPTER 1. FEDERAL FAMILY EDUCATION LOAN PROGRAM: POLICIES
AND PROCEDURES
9A:10-1.3 Definitions
(a) The following words and terms, when used in this subchapter, shall have
the following meanings unless the context clearly indicates otherwise:
“Authority” or “HESAA” means the Higher Education Student Assistance Authority, a State authority, whose purpose is the funding of access to postsecondary education, whether by loans, grants, scholarships or other means. The student assistance programs HESAA administers include the Federal Family Education Loan Program.
“Blanket Certificate of Loan Guaranty” means an insurance program agreement with the Secretary of the United States Department of Education under which the Authority may offer eligible lenders participating in the Authority’s guaranty program a Blanket Certificate of Loan Guaranty that permits the lender to make FFELP loans to eligible borrowers without receiving prior approval of individual loans from the Authority.

“Common Review Initiative” or “CRI” means a group of participating guarantors, including the Authority, that conduct lender reviews by sharing staff and review costs while using common review procedures. The United States Department of Education approved CRI on a permanent basis beginning January 1, 2008 with the approval remaining in effect until the United States Department of Education notifies guaranty agencies otherwise.
“Consolidation loan” means a new loan that discharges a previous loan or loans. Federal loan consolidation enables a borrower with several loans to obtain one loan with one repayment schedule and, with the exception of Health Education Assistance Loan (HEAL) Program loans, one interest rate.

“Delinquency” means the failure of the borrower to make the equivalent of one full payment when due. Delinquency begins the day after a payment is due and continues, if a payment is not made, for a period up until the loan status meets the definition of default.
“Federal Family Education Loan Program” or “FFELP” means the collective term for the Stafford Loan Program (both interest subsidized and unsubsidized), the Supplemental Loan for Students or SLS Program, the Parent Loan for Undergraduate Students (PLUS) Program offered to graduate students and eligible parents of dependent undergraduate students, and the Consolidation Loan Program. The FFELP is a Federal-state-private sector partnership. Financial institutions make FFELP loans with private capital, state-designated guaranty agencies, such as the Authority provide first-line insurance (guarantees for the loans), and the Federal government, through the Federal Department of Education, provides subsidies for student borrowers along with backstop reinsurance and general program oversight and regulation.
“Foreign school” means an eligible school not located in the United States and its territories.

“Lender of last resort” means the Authority or a lender that agrees to certain FFELP loans, as prescribed by the United States Department of Education, to an otherwise eligible borrower who has been unable to obtain a loan from other eligible lenders.
“Lender Reporting System (LaRS)” means the electronic accounting mechanism by which lenders submit reports on a quarterly basis concerning loan origination fees and lender fees relating to the disbursement of new FFELP loans, claims for interest subsidy and special allowance benefits, and summarized loan activity information.
“Master Promissory Note” or “MPN” means a common contract under which a borrower may receive loans for a single academic year or multiple academic years at institutions meeting United States Department of Education criteria in accordance with the Higher Education Act of 1965, as amended, 20 U.S.C. §1087vv, and its implementing regulations 34 CFR 682 et seq.
“National Student Clearinghouse” means a nonprofit, industry-sponsored organization that accepts, processes, and shares student enrollment and deferment information with authorized FFELP participants.
“National Student Loan Data System” or “NSLDS” means a national database comprised of information from the United States Department of Education, guaranty agencies, lenders and schools on Title IV, Higher Education Act financial aid received by students, including, but not limited to, FFELP and Direct loans, and enrollment.
“NCHELP Electronic Standards Committee” means the National Council on Higher Education Loan Programs Committee that is responsible for resolving electronic standardization issues as reported by the national student loan community at large, making recommendations for resolution and maintaining supporting documentation.
“PLUS Loan” or “Federal PLUS Loan” means the Parent Loan for Undergraduate Students Loan. The PLUS Loan Program is available to eligible parents of dependent undergraduate students. On July 1, 2006, eligibility for PLUS loans was extended to graduate and professional students.

“Professional and occupational license” means the whole or part of any State agency permit, certificate, approval, registration, charter or similar form of permission to engage in a profession, trade, business or occupation and any notification required to be made to any State agency that a profession, trade, business or occupation is being engaged in or is expected to be commenced; provided that “license” shall not include any original charter or certificate of incorporation granted by any State agency.
1. For purposes of this definition, “State agency” means the legislative,
executive or judicial branch of the State, including, but not limited to, any department, board, bureau, commission, division, office, council, agency, or instrumentality thereof, or independent agency, public authority or public benefit corporation.
“Secretary” means the Secretary of the United States Department of Education or an official or employee of the United States Department of Education acting for the Secretary under a delegation of authority.

“SLS Loan” or “Federal SLS Loan” means the Supplemental Loan for Students Program, which was targeted for independent undergraduate students, graduate students, and dependent undergraduates whose parents were unable to obtain a PLUS loan. All SLS loans were originated before July 1, 1994.

(b) (No change.)
9A:10-1.4 Role of the Authority as guaranty agency
(a) (No change.)
(b) Key guarantor functions are:
1. Financial aid awareness and related outreach activities: The Authority
provides a toll-free number and web site with information on colleges, careers and financing of higher education. The Authority makes presentations about financial aid opportunities and financial literacy at middle schools, high schools and other sites, holds training workshops for high school guidance counselors and campus administrators, publishes materials on all of the above topics and provides assistance in completing financial aid forms;
2. Access to loans: The Authority furthers access to Federal loans by providing lenders with a guarantee against default, since students generally have no credit history or collateral and pose a risk to lenders absent such guarantee;
3.-11. (No change.)
9A:10-1.6 Types of FFELP loans
(a) A subsidized Federal Stafford loan is available to an eligible student
attending a participating postsecondary school. A student who demonstrates financial need is eligible to have the Federal government pay the interest on the loan to the lender until repayment of the loan begins and during any deferment periods. The student is allowed a grace period (usually six months) after leaving school or dropping below half-time attendance before repayment begins. Repayment of the loan is scheduled over a maximum 10-year period according to the payment plan chosen by the borrower, except that may qualify for an alternate repayment plan with an extended repayment period pursuant to 34 CFR 682.209.
(b) An unsubsidized Federal Stafford loan is available to an eligible student attending a participating postsecondary school. A student who does not demonstrate sufficient financial need, or who requires additional funds above the Federal subsidized loan limits, is typically eligible for an unsubsidized Stafford loan. The Federal government does not pay the interest on an unsubsidized Stafford loan. An unsubsidized Stafford loan borrower is responsible for paying to the lender all interest that accrues on the loan from the time the loan is disbursed until it is paid in full.
(c) A Federal PLUS loan is available to an eligible parent (as defined in 34 CFR 682.201(b)(2)) of a dependent undergraduate student or a graduate or professional student attending a participating postsecondary school. A PLUS loan borrower must not have adverse credit or otherwise must obtain an endorser on the loan. The parent is responsible for paying to the lender the interest that accrues on the loan from the time the loan is disbursed until it is paid in full. Repayment of the loan is scheduled over a maximum 10-year period according to the payment plan chosen by the borrower, except that borrowers may qualify for an alternate repayment plan an extended repayment period pursuant to 34 CFR 682.209.
(d) (No change.)
9A:10-1.7 Lender participation and lender of last resort
(a) (No change.)
(b) The Authority shall ensure that it or a participating lender shall serve as lender of last resort in the State of New Jersey. The lender of last resort shall make a FFELP loan to an otherwise eligible borrower who has been unable to obtain a loan from an otherwise eligible lender and who satisfies both the Federal regulatory criteria for eligibility and any further eligibility criteria provided in the lender of last resort policies and procedures cited in 34 CFR 682.401(c).
9A:10-1.8 School participation
(a)-(b) (No change.)
(c) To assist a school’s financial aid administrator and staff in participating in the FFELP, the Authority shall in general provide assistance to institutions comparable to the kinds of assistance provided to institutions by the United States Department of Education. This assistance may include, but not be limited to, sponsoring of training conferences, participating in State, regional and national associations of financial aid administrators, issuing a newsletter, staffing a customer assistance unit (including a toll-free hotline), and offering an internet website.
(d) A school shall develop procedures to ensure that student status changes are reported correctly and in a timely manner, pursuant to 34 CFR 682.400(b)(20), to the Authority, to NSLDS, to the lender or to all three, as appropriate. Some schools may elect to satisfy this requirement through participation in the National Student Clearinghouse or another entity providing student status reporting services in which the Authority participates. For schools not yet providing student status information to NSLDS, the Authority shall provide a school, on at least a semiannual basis, with a Student Status Confirmation Report (SSCR) listing all students for whom FFELP loans have been obtained for attendance at the school. NSLDS distributes SSCR data to the Authority and other guarantors, and guarantors notify lenders of student status changes. Information and instructions on completing rosters for student status reporting to NSLDS are provided to schools by the United States Department of Education.
(e) (No change.)
9A:10-1.9 Borrower eligibility and loan certification
(a) A borrower files a FAFSA with the United States Department of Education which is used to determine student eligibility for Federal financial aid and the expected family contribution. If a student is eligible for Federal loans, a borrower may request a Master Promissory Note for a Stafford or PLUS loan from the school, the lender, or the Authority. Schools authorized for multi-year use of the MPN are required to develop and document a confirmation process along with the FFELP lender to ensure that the borrower wants subsequent loans. The Authority imposes no guarantor specific policies or procedures for determining eligibility for a Stafford or PLUS loan. Borrower and student eligibility requirements are set forth in 34 CFR Parts 668 and 682, and further explained in the Common Manual.
(b) In certifying the student’s eligibility for a Stafford loan, a school is required to determine his or her eligibility and the maximum amount that may be borrowed. In certifying eligibility for a PLUS loan for undergraduate students, a school is required to make these determinations with respect to the student and the parent. The Authority imposes no guarantor specific policies or procedures for school certification. School certification requirements are set forth in 34 CFR Parts 668 and 682, and further explained in the Common Manual.
(c) To facilitate the loan guaranty process, the Authority participates on the NCHELP Electronic Standards Committee. The Committee’s goal is to establish a coordinated and proactive approach for all electronic standardization efforts.
9A:10-1.10 Permissible charges by lenders to borrowers
(a) The permissible charges by lenders to borrowers are limited to the charges set forth in 34 CFR 682.202, which address interest, capitalization of interest, loan origination fee, Federal default fee, administrative charge for a refinanced PLUS or SLS loan, late charge, and collection charges.
1. Lenders shall charge the borrower a Federal default fee equal to the amount permitted under 34 CFR 682.202. Federal default fees are applied when the loan is disbursed. Lenders or the Authority may pay the Federal default fee unless restricted by the United States Department of Education.
(b) (No change.)

9A:10-1.11 Guarantee and disbursement
(a) (No change.)
(b) Disbursement is the transfer of loan proceeds by the lender to a borrower, school, or escrow agent, net of any origination and Federal default fees. Disbursement may be accomplished by checks for individual borrowers, by master checks containing loan proceeds for more than one borrower, or by electronic funds transfer, in accordance with 34 CFR Part 682. A Stafford loan disbursed by individual check shall be made copayable to the student and the school. If the lender issues an individual Stafford loan check, the lender is required to indicate the student’s social security number, enrollment period for the loan, and the type of loan on each individual loan check. If the lender issues an individual PLUS loan check, the lender is required to indicate the student’s name and social security number on each individual loan check.
(c) In the case of a student enrolled in an eligible foreign school, if the foreign school requests, the lender shall disburse a Stafford loan directly to the student only after verification of the student’s enrollment by the lender or guaranty agency. If the student is enrolled in a study-abroad program approved for credit by the home school and if the student requests, the lender may disburse the loan directly to the student only after verification of the student’s enrollment with the home institution by the lender or guaranty agency; or to the home institution if the borrower provides a power-of-attorney to an individual not affiliated with the institutions to endorse the check or complete an electronic funds transfer authorization.
(d) (No change.)

9A:10-1.12 Loan servicing
(a)-(b) (No change.)
(c) Pursuant to 34 CFR 682.208, a lender shall report enrollment and loan status information, or any Title IV loan-related data required by the Secretary, to the Authority or the Secretary, as applicable, by the deadline date established by the Secretary.
9A:10-1.13 Delinquency and default prevention
(a) Lenders are required to adhere to due diligence (collection practices) to
prevent delinquent loans from becoming defaulted loans. In the event that a loan becomes delinquent, the lender of a loan guaranteed by the Authority is required to request default aversion assistance from the Authority. Due diligence activities shall be performed in the following situations: a borrower is delinquent in making payments, a lender is unable to determine the location of a borrower whose loan is delinquent, or a borrower is determined to be ineligible for a loan (due to the borrower's or student's error). To be reimbursed for loss on a loan due to the borrower's default, death, disability, bankruptcy filing, ineligibility for the loan, or situations involving school closure, false certification, or unpaid school refund, the lender of a loan guaranteed by the Authority shall submit a claim with the Authority according to the procedures and deadlines set forth in 34 CFR Part 682 and this section. The Common Manual explains lender due diligence and claim filing.
(b) A lender shall be permitted to submit a request for default aversion
assistance to the Authority not earlier than a borrower's 60th day of delinquency and no later than the 120th day of delinquency. If the Authority performs default aversion assistance in response to a lender's initial request for default aversion assistance on that loan, the Authority receives a default aversion fee from the United States Department of Education. If a lender submits a request after the 120th day of delinquency, the Authority shall provide the default aversion assistance for which it may receive a default aversion fee from the United States Department of Education. Other default aversion assistance time frames for the Authority are:
1. (No change.)
2. Requests for skip-tracing assistance may be submitted at all times;
3. (No change.)
4. Notification to the Authority is required if there is any change
in the delinquency date.
(c) The Authority may require an indemnification agreement when the lender submits as claim file documentation a true and exact copy of a promissory note if the copy raises issues of authenticity or other issues affecting legal enforceability or if an affidavit for lost note is submitted in lieu of a note or copy.
(d) (No change in text.)
(e) Failure to resubmit a claim, other than a bankruptcy claim, by the 60th
day after the lender’s receipt of the original rejection of such claim by the Authority, or a request for additional information by the Authority, shall result in a timely filing violation. Failure to resubmit a bankruptcy claim by the 30th day after the lender’s receipt of the original rejection of such claim by the Authority shall result in an interest penalty, provided the failure does not cause the Authority to miss a court established deadline, in which case the guaranty is lost.
9A:10-1.14 Default consequences and collection policies and procedures
(a) The Authority adheres to the guaranty agency due diligence policies and
procedures set forth in 34 CFR Part 682 to collect on defaulted FFELP loans. These policies and procedures include, but are not limited to, charging the borrower collection costs, including attorney fees, and interest, capitalizing unpaid interest, reporting default claims to national credit bureaus after offering the borrower an administrative review of the status of the loan at issue, engaging in collection efforts including written and telephone notification to the borrower, initiation of proceedings to offset the borrower's State and Federal income tax refunds, property tax rebates or other governmental payments and lottery prize winnings, initiating wage garnishment, suspension of occupational and professional license, and taking such other steps to collect the loan as permitted under Federal and State law. Additionally, as set forth in a FFELP loan promissory note, failure to repay a FFELP loan may also result in legal action, loss of eligibility for other student aid and assistance under most Federal benefit programs, loss of eligibility for deferments, negative credit reports, and wage garnishment.
(b) The Authority participates in information exchanges with the Department of Labor, the Division of Taxation, Division of Lottery, Division of Consumer Affairs, and other State agencies and bodies as well as public and private sector entities within or outside this State for purposes of collecting on defaulted student loans. Additionally, the Authority receives data from the National Directory of New Hires.
(c) Administrative review and appeal procedures prior to reporting default
loan status to credit bureaus are as follows:
1.-2. (No change.)
3. If a borrower disagrees with the decision on his or her loan status reached on administrative review, and wishes to appeal that decision, the borrower shall file an appeal with the Authority within 10 days of notification of the administrative review decision. Appeals shall be in the form of a letter addressed to the HESAA Appeals Committee, Director, Student Loans, PO Box 549, Trenton, NJ 08625-0549, and shall contain the identification of the contested loan(s) and the reasons for appeal. Appeals shall be considered on the basis of this appeals process approved by the Authority. As part of the Authority’s response to a borrower who appeals an adverse decision resulting from an administrative review, the Authority shall provide the borrower with information on the availability of the Student Loan Ombudsman’s office in the United States Department of Education.
9A:10-1.16 Loan transfer, refinance, and consolidation
(a)-(b) (No change.)
(c) The Authority participates in the Federal Consolidation Loan Program in
accordance with section 428C of the Higher Education Act of 1965, as amended, and its implementing regulations. To participate in the Authority's consolidation program, an eligible lender must be approved by the Authority to enter into a Consolidation Participation Agreement with the Authority, and sign this Agreement. To qualify for the Authority's Consolidation Loan Program, a borrower must satisfy the eligibility criteria set forth in section 428C and implementing regulations, as well as satisfy Authority criteria which include not incorporating a defaulted loan in a Consolidation loan, and evidencing a connection to New Jersey, unless otherwise permitted by the Authority. Evidencing a connection to New Jersey shall mean that either at least one underlying loan to be consolidated was guaranteed by the Authority or that the borrower is a New Jersey resident at the time of consolidation. The Consolidation Loan Program is more fully explained in the Common Manual.
9A:10-1.17 School and lender training and other services
As permitted under the Higher Education Act of 1965, as amended, the Authority
may use funds in the Authority's operating fund for application processing, loan disbursement, enrollment and payment status management, default aversion activities, default collection activities, school and lender training, financial aid awareness and related outreach activities, compliance monitoring, and other student financial aid and related activities as selected by the Authority. The Authority's outreach or "client services" activities shall include, but not be limited to, training of program participants and secondary school personnel, dissemination of FFELP-related information and materials to schools, loan holders, prospective loan applicants, and their parents, and training at workshops, conferences or other forums. The Authority issues a newsletter on student financial assistance topics, and maintains an internet website.
9A:10-1.18 Authority guaranty agency enforcement requirements: program reviews
(a) The Authority is required by FFELP regulations, 34 CFR Part 682, to
conduct comprehensive biennial program reviews of certain schools and lenders participating in the FFELP. The Authority may collaborate with other guarantors in performing lender reviews pursuant to the Common Review Initiative. Program reviews are conducted to assess the administrative and financial capability of schools and lenders with applicable requirements of the FFELP. These requirements are those of the Higher Education Act of 1965, as amended, the Federal regulations (34 CFR Parts 600, 668, and 682), and Authority policies and procedures. The Authority may elect to review third-party servicers of schools and lenders. The Authority may also elect to review other agents, such as special counsel performing litigation on defaulted FFELP loans. If the Authority elects to review third-party servicers, it shall follow the program review process for servicers outlined in the Common Manual.
(b) (No change.)
(c) The Authority shall perform a biennial program review of each
participating lender whose dollar volume of FFELP loans made or held by the lender and guaranteed by the Authority in the preceding year meet one or more of the volume criteria set forth in 34 CFR 682.410(c). The Authority may collaborate with other guarantors participating in the Common Review Initiative to conduct joint program compliance reviews of lenders. The Authority may request that the United States Department of Education approve substitutions to its list of required lender reviews. In addition to the Federal criteria used in selecting lenders for review, the Authority may consider other factors, such as those listed in the Common Manual. These other factors are: loan volume trends, significant increases in cumulative or cohort default rates, evidence of regulatory violations, evidence of potential fraud or abuse in its FFELP participation, and complaints from schools, students, or borrowers. The Authority may conduct compliance reviews in other areas of lender administration as long as, at a minimum, the scope includes NSLDS reconciliation.
(d) (No change.)
(e) Preparation for the review is as follows:
1. The Authority or CRI review team shall notify the school or
lender to be reviewed, provide the date(s) of the on-site review, and request administrative and financial information related to the entity's eligibility and participation in the FFELP. Prior to the on-site review, the reviewer shall develop a profile of the school or lender from data maintained by the Authority or CRI participating guaranty agencies. For lenders, this data includes loan volume, student populations and sample, and lender search report. For schools, this data includes Stafford and PLUS loan volume for the period, training attendance record, and borrower complaints, if any. The reviewer may also require the school or lender to complete a questionnaire on internal control procedures and policies related to its administration of the FFELP.
2. (No change.)
(f) The Authority or CRI review team shall provide the school or lender the
opportunity to present questions or supply additional information. The school or lender being reviewed shall cooperate with the review team by making staff available to reviewers at entrance and exit interviews and by supplying additional material to reviewers if requested during the on-site visit.
(g) Program review follow up and other enforcement procedures are as
follows:
1. The reviewer shall issue a program review report to
the school or lender being reviewed.
2. (No change.)
3. When the program review ends, the reviewer shall notify the school or lender in writing that the program review is closed. The reviewer shall also update the Postsecondary Education Participants System (PEPS) database. The reviewer shall at the same time notify the United States Department of Education that the program review is closed.
4. If the Authority or CRI review team is unable to close a program review because the school or lender is uncooperative in taking the required corrective action, the reviewer shall refer the case to the United States Department of Education.
5. The Authority or CRI review team may pursue a limitation, suspension, or termination action regarding participation in the FFELP as a result of a program review. The limitation, suspension, and termination process for lenders and schools is set forth in 34 CFR 682.700, Subpart G.
6. If potential fraud or abuse with respect to FFELP participation is
identified during a program review, the reviewers shall be obligated to notify and forward all supporting documentation to the United States Department of Education’s Office of Inspector General. The Authority shall also be obligated to comply with other applicable enforcement requirements set forth in 34 CFR 682.410(c).
SUBCHAPTER 2. SOCIAL SERVICES STUDENT LOAN REDEMPTION
PROGRAM
9A:10-2.2 Definitions
The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

“Program” or “SSSLRP” means the Social Services Student Loan Redemption Program established pursuant to P.L. 2005, c. 157.

“Student Loan Office” means the Student Loan Office, or its successor office, located within the Authority.
9A:10-2.5 Application procedures
(a) In order to apply for participation in the program, an applicant must
complete a loan redemption program application and submit it to the Student Loan Office.
1. (No change.)
2. Inclusive within the program application, an applicant must also
have his or her employer certify full-time employment as a direct care professional in a qualified facility before submitting the application to the Student Loan Office.
(b)-(c) (No change.)
9A:10-2.6 Terms for loan redemption
(a)-(b) (No change.)
(c) In order to continue eligibility for loan redemption under the program, a participant must submit certification, prior to the annual redemption of loan indebtedness, of his or her full-time employment as a direct care professional in a qualified facility to the Student Loan Office.
9A:10-2.7 Exclusion from New Jersey gross income for tax purposes
Gross income, for the purposes of the “New Jersey Gross Income Tax Act,” N.J.S.A. 54A:1-1 et seq., shall not include amounts received as redemption for eligible student loan expenses under the “Social Services Student Loan Redemption Program,” P.L. 2005, c. 157. The SSSLRP loan redemption payments are not excluded from gross income for Federal tax purposes.
9A:10-2.9 Cancellation of the loan redemption contract by the program participant
A program participant may cancel his or her loan redemption contract with the Authority by submitting written notification to the Student Loan Office. The participant assumes full responsibility for repayment of the full amount of his or her loan(s) or that portion of the loan(s) that has not been redeemed by the State in return for partial fulfillment of the four-year contract.
9A:10-2.11 Waiting list for eligible applicants if program funds are exhausted
(a)-(d) (No change.)
(e) When an eligible applicant on the waiting list is notified of his or her potential eligibility for program participation, the applicant shall submit certification of continuous full-time employment as a direct care professional by a qualified facility or agency to the Student Loan Office.
SUBCHAPTER 3. OB/GYN STUDENT LOAN EXPENSE REIMBURSEMENT
PROGRAM
9A:10-3.2 Definitions
The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise:

“Student Loan Office” means the Student Loan Office, or its successor office, located within the Authority.
9A:10-3.5 Application procedures
(a) In order to apply for participation in the program, an applicant must
complete a loan reimbursement program application and submit it to Student Loan Office no later than July 1 of the fiscal year in which the reimbursement will be paid.
1. (No change.)
2. Inclusive within the program application, an applicant must also have
his or her current or anticipated employer certify full-time employment, or the commitment to employ full time and the start date, as an OB/GYN before submitting the application to the Student Loan Office. If the applicant is self-employed, he or she must provide the signed certification.
(b)-(c) (No change.)
9A:10-3.8 Cancellation of the loan reimbursement contract by the program participant
(a) A program participant may cancel his or her loan reimbursement contract
with the Authority by submitting written notification to Student Loan Office. The participant must repay the full amount of the loan reimbursement to the Authority within 30 days of canceling the contract. Any amount not repaid when due will accrue interest at the prevailing Stafford Loan rate as established by the U.S. Department of Education annually.
1. (No change.)

SUBCHAPTER 6. THE NEW JERSEY COLLEGE LOANS TO ASSIST STATE
STUDENTS (NJCLASS) PROGRAM: POLICIES AND
PROCEDURES
9A:10-6.2 Scope
These rules provide the policies and procedures that govern the NJCLASS Program, a State student loan program administered by the Higher Education Student Assistance Authority (HESAA).
9A:10-6.3 Definitions
(a) The following words and terms, when used in this subchapter, shall have the
following meanings, unless the context clearly indicates otherwise:
“Annual income” means the borrower’s income as reported for Federal income tax purposes.

“Totally and permanently disabled” means the condition of any individual who is unable to work and earn money or attend school because of an injury or illness that is expected to continue indefinitely or result in death.
(b) (No change.)
9A:10-6.4 Eligibility for NJCLASS Loan, NJCLASS Variable Rate Loan, NJCLASS
Graduate/Professional Students Loan, and NJCLASS Postgraduate Loan
(a)-(c) (No change.)
(d) To be eligible for an NJCLASS Postgraduate loan for student borrowers, each student must satisfy the requirements of (b)1, 3 and 7 above as well as the following:
1.-2. (No change.)
3. Not owe a grant refund, be in default on a student loan, have a student loan written off as uncollectible, or have adverse credit as outlined in N.J.A.C. 9A:10-6.5(d); and
4. (No change in text.)
9A:10-6.5 NJCLASS creditworthiness
(a)-(b) (No change.)
(c) To be approved for a fixed rate NJCLASS loan, a creditworthy borrower or cosigner must have an annual income that exceeds Federal poverty guidelines, as adjusted annually by the United States Department of Health and Human Services.
(d) A borrower with one or more of the items listed below in his or her credit history may be denied an NJCLASS loan for not being creditworthy. These items include delinquent accounts, paid and unpaid collection accounts, paid and unpaid charged off accounts, foreclosure, repossession, bankruptcy, or a paid or unpaid judgment. However, a borrower in the NJCLASS fixed rate program may be eligible if the borrower is able to secure a creditworthy cosigner.
9A:10-6.6 Loan amounts
(a) If the NJCLASS loan is financed in whole or in part by qualified student loan bonds, as described in section 144(b) of the Federal Internal Revenue Code of 1986, as amended, 26 U.S.C. §144(b), the amount borrowed shall not exceed a student's estimated cost of attendance at the eligible institution minus all other financial assistance for which the student is eligible (excluding any financial assistance which would not cause the bonds to fail to qualify under section 144(b) of the Federal Internal Revenue Code) for the academic period for which the loan is intended. This means that an eligible institution shall determine a student borrower's loan amount eligibility for Federal Stafford loans or Federal Direct Stafford loans prior to determining a student borrower's loan amount eligibility for an NJCLASS loan. This eligibility determination excludes eligibility for Federal PLUS and Federal Direct PLUS loans.
(b) If the NJCLASS loan is not financed in whole or in part by qualified student loan bonds, the amount borrowed may not a student’s estimated cost of attendance at the eligible institution minus all other financial assistance for which the student is eligible for the academic period for which the loan is intended. This means that an eligible institution shall determine a student borrower’s loan amount eligibility for Federal Stafford loans or Federal Direct Stafford loans prior to determining a student borrower’s loan amount eligibility for an NJCLASS loan. This eligibility determination excludes eligibility for Federal PLUS and Federal Direct PLUS loans.
(c) (No change.)
9A:10-6.13 Consolidation Loan Program
(a)-(e) (No change.)
(f) An NJCLASS Consolidation loan borrower and/or co-borrower shall meet minimum income requirements and be determined creditworthy by the Authority in order to be eligible for an NJCLASS Consolidation loan. Cosigners shall be required to meet the minimum income or creditworthy determination by the Authority if the borrower or co-borrower are unable to do so.
1. To be approved for an NJCLASS Consolidation loan, a creditworthy borrower, co-borrower or cosigner shall have an annual income that exceeds Federal poverty guidelines, as adjusted annually by the United States Department of Health and Human Services.
2. (No change.)
(g)-(n) (No change.)
9A:10-6.14 Delinquency
(a) (No change.)
(b) Default prevention activities shall include, but not be limited to, letters and
telephone calls to the borrower and cosigner, if any, beginning after the first 10 days of delinquency. Thirty days before sending a letter of default (180 days delinquent, or 240 days delinquent depending on whether payments are due monthly or less frequently than monthly), the Authority shall attempt to telephone the borrower and cosigner and send the borrower and cosigner a final demand letter.
(c) (No change.)
9A:10-6.17 Discharge
(a) (No change.)
(b) If an individual borrower dies, the obligation of the borrower to make any
further payments on the loan is discharged. A discharge of a loan based on the death of the borrower must be based on an original or certified copy of the death certificate, or an accurate and complete photocopy of the original or certified copy of the death certificate.
(c) If the Authority determines that an individual borrower is totally and
permanently disabled, the obligation of the borrower to make any further payments on the loan is discharged. A borrower is not considered totally and permanently disabled on the basis of a condition that existed at the time he or she applied for the loan, unless the borrower’s condition has substantially deteriorated later, so as to render the borrower totally and permanently disabled. After being notified by the borrower, or the borrower’s representative, that the borrower claims to be totally and permanently disabled, the Authority shall request that the borrower, or the borrower’s representative, submit the discharge application provided by the Authority. The application must contain a certification by a physician, who is a doctor of medicine or osteopathy and legally authorized to practice in a state, that the borrower is totally and permanently disabled as defined in N.J.A.C. 9A:10-6.3.
(d) (No change.)
SUBCHAPTER 7. POLICY GOVERNING NEW JERSEY BETTER EDUCATIONAL
SAVINGS TRUST (NJBEST) PROGRAM
9A:10-7.3 Definitions
The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise.

“Program” or “NJBEST” means the New Jersey Better Educational Savings Trust Program established pursuant to P.L. 1997, c. 237 and which includes both the NJBEST 529 College Savings Plan and the national 529 College Savings Plan offered by the Authority.

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