NJ Class Income-Based Repayment Program: How it Works

• New Jersey offers two income-based repayment programs for NJCLASS loans, RAP and HIARP, which can significantly lower your monthly payments.

• You must start with RAP first, which reduces payments to 10% of your income above 150% of the federal poverty level for up to two years.

• Everyone who signed your loan (including cosigners) must agree to participate and provide their financial information before you can apply.

If you’re struggling to keep up with your NJCLASS loan payments, New Jersey offers two income-based repayment programs: Repayment Assistance Program (RAP) and the Household Income Affordable Repayment Plan (HIARP).

These plans are tailored to match your payments with your income, providing short-term relief and long-term solutions.

Here’s what you’ll learn in this guide:

• How these programs calculate your payments based on income

• Whether you qualify and the steps to sign up

• Differences between RAP and HIARP (and which might work better for you)

• What to expect once you’re enrolled

• Other options if these programs aren’t the right fit

Think of these repayment plans as federal income-based programs but specifically designed for NJCLASS loans. They work differently, so we’ll break down everything you need to know to make the best decision for your situation.

Looking for details on the federal Income-Based Repayment plan? See how it works in our complete guide.

NJ CLASS Income-Driven Repayment Programs are two payment relief options managed by the New Jersey Higher Education Student Assistance Authority (HESAA) to help borrowers experiencing financial hardship.

Here’s how the two programs work:

• Repayment Assistance Program: Offers short-term relief by reducing your monthly payments to 10% of qualifying income for up to two years.

• Household Income Affordable Repayment Plan: Provides long-term assistance after RAP by extending repayment to 25 years with payments at 15% of qualifying income.

These programs work in sequence. You’ll need to use RAP first before you can move on to HIARP. Together, they create a safety net to help you manage your NJCLASS loan payments when finances are tough.

Why Does New Jersey Provide These Programs?

New Jersey created RAP and HIARP to help NJCLASS borrowers with high monthly payments. This is to make your payments affordable based on your income so you can avoid falling behind.

Best of all, these programs don’t rely on state tax dollars—they’re funded through HESAA’s revenue bonds.

You’re eligible for NJ CLASS Income-Based Repayment if you have a Standard NJCLASS loan and are experiencing financial hardship.

Before you apply, remember that all parties on your loan – including cosigners – must agree to join the program and share their financial details.

Here’s what makes you a good candidate:

• You have a Standard NJCLASS loan that isn’t in default

• Your current loan payments are difficult to manage, given your income

• Everyone who signed your loan (borrowers and cosigners) agrees to participate

• You can document your household’s financial situation with tax returns and pay stubs

You’re not a good candidate if:

• You have a Graduate/Professional, Refi+, or Consolidation NJCLASS loan

• Your loan is in default status

• Your loan payments are 60 days or more delinquent

• Not all parties on your loan are willing to participate in the program

• You’re already using HIARP and have missed a payment (loans are removed from the program after 60 days of delinquency)

• You’re currently a party to another loan enrolled in HIARP (you can’t take out new NJCLASS loans while enrolled)

Your monthly payment is based on your household income after covering basic needs, which HESAA defines as 150% of the federal poverty level for your family size. They only consider the income above this threshold when calculating your payments.

Here’s how it works:

1. HESAA subtracts 150% of the federal poverty level from your total household income, including income from all borrowers and cosigners.

2. Based on your program, they calculate your payment: RAP (10% of the remaining amount) while the HIAP (15% of the remaining amount)

Each program also has minimum payment requirements:

• RAP: $5 per month for each eligible loan.

• HIARP: $25 per month minimum payment.

Examples to Show How It Works

Single Borrower in RAP:

• Annual household income: $45,000

• Family size: 1 person

• 150% of the poverty level (2024): $21,870

• Income above poverty level: $23,130

• RAP calculation: ($23,130 × 10%) ÷ 12 = $193 monthly payment

Family with Cosigner in HIARP:

• Combined household income: $75,000

• Family size: 4 people

• 150% of the poverty level (2024): $45,000

• Income above poverty level: $30,000

• HIARP calculation: ($30,000 × 15%) ÷ 12 = $375 monthly payment

These payments adjust annually based on your updated income certification and family size. You may also check out our guide on How the Federal Income-Based Repayment is Calculated to see how it compares to these programs created by the State of New Jersey.

The biggest pro is that it lowers your monthly payments by matching them to your income levels. RAP allows you to pay 10% of your disposable income (money left after basic living expenses) for two years with no interest, while HIARP extends repayment to 25 years at 15% and forgives any remaining loan balance.

The main con is the long-term cost, as interest builds up under HIARP, and forgiven balances are taxed as income.

Here’s a closer look at the benefits and drawbacks:

Benefits

• HESAA covers your interest charges during RAP (first two years), and all payments reduce your principal

• Payments become more manageable based on your income

• Your loan gets extended to 25 years under HIARP

• Any remaining balance after 25 years is forgiven

• Making reduced payments helps maintain good credit

• You get protection from default if you stay current

Drawbacks

• Interest continues to grow during HIARP at your original rate

• You can’t take out new NJCLASS loans while in HIARP

• Missing payments by 60 days removes you from the program

• Forgiven loan amounts may be taxed as income

• All parties on your loan must recertify income annually

• Late payments still hurt your credit score

Want expert help to decide if NJ Class Income-Based Repayment is right for you? Our student loan lawyers can analyze your situation, explain how your payments would change, and catch important details you might miss.

Related: Disadvantages of Income-Based Repayment

You can apply for NJ CLASS Income-Based Repayment by mail. The process requires coordination with all loan parties and submission of specific documentation to HESAA.

• Step 1 – Gather Your Documentation: Current federal tax return, most recent W-2s, latest pay stubs, NJCLASS loan account number, spouse/domestic partner tax documents (even if not on loan), and proof of family size from tax returns.

• Step 2 – Get the Application Form: Download the HIARP application from www.njclass.org. Each person on your loan needs their form. You can also download it here.

• Step 3 – Complete Your Paperwork: Fill out every application section, including student information, your role on the loan, family size, and income details.

• Step 4—Collect All Signatures: Ensure that every party on the loan (borrowers, co-borrowers, and cosigners) signs their respective applications.

• Step 5 – Submit Everything to HESAA: Mail your complete application package to: HESAA P.O. Box 544 Trenton, NJ 08625-0544

• Step 6 – Wait for Response: HESAA reviews applications within 21 days. Keep making your current payments until you’re approved and receive new payment instructions.

If mailing isn’t ideal or you are having trouble with your application, you can reach out to HESAA at (1-800-792-8670) for assistance.

If you don’t qualify for NJ CLASS Income-Based Repayment, you have two options: Apply for a forbearance or deferment for temporary relief or look into refinancing.

But be careful with refinancing – while lower interest rates might look good, you’ll lose access to income-based plans and other NJCLASS benefits.

What you can do:

• Contact HESAA at (1-800-792-8670) before missing any payments

• Ask about forbearance or deferment options due to hardship

• Consider private loan refinancing if you have good credit

• Discuss your specific situation with HESAA loan counselors

Pro Tip: The best option depends on your specific situation. If you’re having trouble making payments, reach out to HESAA immediately. The sooner you contact them, the more options you’ll have to manage your loans.

The NJCLASS Income-Based Repayment programs, RAP and HIARP, are designed to make your payments more manageable. RAP provides short-term relief by lowering payments to 10% of your income for two years, while HIARP offers a long-term plan with 25 years of payments capped at 15% of your income and eventual loan forgiveness.

To apply, you’ll need to gather specific documents, such as proof of income and tax returns, and coordinate with all loan cosigners.

If you’re unsure about your options or need help with the application, consider reaching out to a student loan lawyer in New Jersey who specializes in NJCLASS loans.

Related reading:

• Latest Income-Based Repayment Chart

• IBR Income Limits Explained

• IBR Loan Forgiveness

• IBR for Parent PLUS Loans

• IBR for Private Student Loans