N.J. Admin. Code § 9A:10-6.18

Current through Register Vol. 56, No. 21, November 4, 2024

Section 9A:10-6.18 - Refinance Loans

(a) Subject to the availability of funds with sufficiently low interest rates, the Authority may offer refinance loans. The purpose of such refinance loans is to assist qualified borrowers by lowering the total finance charges associated with repaying their student loans, by paying off one or more existing NJCLASS Loan Program loans, other Refinance Loans, NJCLASS Consolidation Loans, Federal Parent PLUS loans, and/or school-certified private education loans, and replacing such obligations with one single loan that charges a lower interest rate than that of the original loan or loans.

(b) The borrower of a refinance loan must be the borrower on all of the underlying loans being refinanced by the refinance loan.

(c) All underlying loans must be in monthly repayment of principal and interest in order to be refinanced by a refinance loan.

(d) To be eligible for a refinance loan, the borrower and/or co-borrower shall:

1. Be a citizen, national, or legal resident of the United States or be in the United States for other than temporary purposes and intend to become a permanent resident (as evidenced by United States Citizenship and Immigration Services, or its successor agency, documentation);

2. Be at least 18 years old;

3. Not owe a grant refund, be in default on a student loan, have a student loan written off as uncollectible, or be in violation of any of the other criteria for determining creditworthiness as outlined at (f) below;

4. Provide an acceptable cosigner if the Authority determines that one is required;

5. In the case of any Federal student loan amount, or any NJCLASS Loan Program Loan, Refinance Loan, or NJCLASS Consolidation Loan amount that previously was canceled due to the borrower's total and permanent disability, obtain a certification from a physician that the borrower's condition has improved and that the borrower is able to engage in substantial gainful employment and sign a statement acknowledging that the refinance loan that the borrower receives cannot be canceled in the future on the basis of any impairment present when the new loan is made, unless that impairment substantially deteriorates; and

6. Provide at least two references for the borrower, and co-borrower, if applicable, and at least two references for the cosigner, and joint cosigner, if applicable.

(e) The Authority shall have final decision-making authority concerning the eligibility of a borrower, co-borrower, and/or cosigner to participate in the Refinance Loan Program.

(f) A refinance loan borrower and/or co-borrower shall meet minimum income requirements and be determined creditworthy by the Authority in order to be eligible for a refinance loan. Cosigners shall be required to meet the minimum income and creditworthy determination by the Authority if the borrower or co-borrower are unable to do so.

1. To be approved for a refinance loan, a creditworthy borrower, co-borrower, or cosigner shall have documentable annual income that exceeds Federal poverty guidelines, as adjusted annually by the United States Department of Health and Human Services. The amount by which income must exceed Federal poverty guidelines is determined by the indentures for the bonds or notes whose proceeds are funding the loan.

2. A borrower with one or more of the items listed below in his or her credit history may be denied a refinance loan for not being creditworthy. These items include delinquent accounts, paid and unpaid collection accounts, paid and unpaid charged off accounts, foreclosure, repossession, bankruptcy, and a paid or unpaid judgment. However, a borrower in the Refinance Loan Program may be eligible if the borrower is able to secure a creditworthy cosigner.

(g) The student beneficiary of each of the underlying loans that make up the refinance loan must meet the New Jersey nexus requirement with respect to either the underlying loan or the refinance loan. The student beneficiary meets the New Jersey nexus requirement, if:

1. At the time the original loan was originated, the student beneficiary was a resident of New Jersey;

2. The proceeds of the original loan were used to attend an eligible institution located in New Jersey; or

3. At the time the refinance loan is originated, the student beneficiary is a resident of New Jersey.

(h) The process to borrow pursuant to the Refinance Loan Program shall be, as follows:

1. The borrower shall complete the Refinance Loan application and promissory note. All parts of the application and promissory note shall be completed and all requested documentation shall be submitted to the Authority.

2. The Authority shall process the application and upon approval will provide the applicant(s) a refinance loan offer. Borrowers will have 30 days to accept the loan. Borrowers will not receive the refinance loan unless they accept the offer.

3. Once the borrower accepts the loan offer, the borrower shall contact the lenders for the underlying loans to request a payoff amount that is accurate for at least 15 days and shall provide that information to the Authority.

4. The refinance loan amount will be calculated based upon the sum of the payoff amounts for each underlying loan being refinanced.

5. The Authority shall provide the borrower, co-borrower, and cosigner, if any, with a completed Refinance Loan Pre-Disbursement Disclosure Statement or other disclosures, as required by Federal law.

6. Refinance loan proceeds will be applied to satisfy the outstanding underlying loans included in the Refinance Loan.

(i) Refinance Loan borrowers and/or co-borrowers may be required to pay an application/administrative fee, as prescribed by the bond indentures. This fee will be added to the sum of the outstanding principal and interest balance of each underlying loan being refinanced at the time of approval. In addition, borrowers and/or co-borrowers may be required to pay a servicing fee for the Refinance Loan, if provided for by the promissory note.

(j) The interest rate on the refinance loan will be a fixed rate based upon a calculation or rate defined in the bond indentures.

(k) Late fees may be charged on a Refinance Loan in accordance with N.J.A.C. 9A:10-6.10.

(l) Refinance Loan borrowers shall begin to pay the principal and interest of the Refinance Loan on a monthly basis. The first payment of principal and interest is due within 60 days after the loan is disbursed. Notwithstanding any periods of deferment and/or forbearance, Refinance Loans shall be paid in full within the amount of years from the date of disbursement, as specified in the Application, Promissory Note, and disclosures. The amount of years in which a Refinance Loan is to be repaid is determined by the indentures for the bonds or notes whose proceeds are funding the loan. The borrower and/or co-borrower have the right to repay the entire loan or any portion of the loan at any time without penalty.

(m) The Authority may, at its discretion, grant borrowers periods of deferments or forbearance in the repayment of the Refinance Loan. Forbearance will only be granted if the ability of both the borrower and co-borrower to make scheduled payments has been impaired based on the same or differing conditions. Forbearance may be granted for situations including, but not limited to, financial hardship, which means situations where the overall financial circumstances of the individual seeking relief are such that he or she is unable to maintain a basic standard of living and still make Refinance Loan debt payments. During periods of forbearance, the Refinance Loan will revert to quarterly or monthly payments of interest only. The maximum allowable time period for financial hardship forbearance set forth at N.J.A.C. 9A:10-6.12(d) " pertains to Refinance Loans. Deferments will be granted in the event of temporary total disability of an eligible student borrower on the underlying loans. To qualify for this deferment, the student borrower shall submit a request in a form prescribed by the Authority and provide the Authority with a statement from a physician, who is a doctor of medicine or osteopathy, and is legally authorized to practice, certifying that the student borrower is temporarily totally disabled. If an eligible student borrower qualifies for this deferment, it will be granted regardless of whether the other parties to the loan qualify for a deferment.

(n) NJCLASS Loan Program provisions, which pertain to delinquency, set forth at N.J.A.C. 9A:10-6.14; credit bureau reporting, set forth at N.J.A.C. 9A:10-6.15; default, consequences of default, and rehabilitation, set forth at N.J.A.C. 9A:10-6.16; discharge, set forth at N.J.A.C. 9A:10-6.17; and enforcement requirements for schools, set forth at N.J.A.C. 9A:10-6.19, shall be in effect for refinance loans.

N.J. Admin. Code § 9A:10-6.18

Amended by 46 N.J.R. 2358(a), effective 12/1/2014

Amended by 56 N.J.R. 374(a), effective 3/4/2024