NJ launches ‘Pay it Forward’ zero-interest college loan program
New Jersey’s Pay it Forward program, a new workforce development initiative that aims to help residents get quality post-secondary education and training to advance their careers, launched Wednesday.
The first of its kind in the nation, the program’s goal is to build a strong and talented workforce while supporting the state’s economic growth, Gov. Phil Murphy said at the Journal Square campus launch. from Hudson County Community College in Jersey City.
Participants will receive interest-free, no-fee loans with no upfront costs, as well as non-repayable living allowances and package supports, to enable them to affordably prepare for well-paying, career-oriented jobs in care. healthcare, information technology (IT) and clean energy sectors, Murphy said.
The $12.5 million “student-friendly” loan program for students is primarily aimed at interest-free tuition reimbursement through a partnership between the state and private companies, which ties loan repayment to the amount that students will earn after graduation.
The program is designed to take away the “uncertainty and stress” students face when cost is a factor in choosing a career or major, Murphy said. According to the governor’s office, the loan terms are designed to be more borrower-friendly than even federal student loans.
The program will train an initial cohort of students by paying for their tuition and some of their costs through grants for stipends for living expenses and mental health counseling services.
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The fund is a “revolving” fund, said David Socolow, head of the Higher Education Student Assistance Authority. This loan offers “extraordinary consumer downside protections” because students who receive the funds pay no interest or fees and are only required to repay them if they are successful, and that success is tied to an income threshold. , Socolow said after the announcement. Money repaid by students will flow back into the program to fund future students in high-demand, high-growth industries.
Students must start repaying the loan only after they find a job and start earning a living.
Reimbursement is limited to the amount of tuition fees and may be waived for students whose income does not meet the $55,000 income threshold. There is a 90-day grace period after graduation before the loan takes effect, although students can wait until they start earning money to repay what is ‘they have to,’ said Tracy Palandjian, CEO of Social Finance, a nonprofit organization hired by the state to create the Pay It Forward over the past year.
The New Jersey CEO Council, a group of private companies doing business in the state, donated to the program.
Those who land good jobs at a particular income threshold repay the interest-free loans, those who don’t get a job with a good salary don’t have to repay the loan at all, Palandjian said. “We hope to see businesses turn to this program to fill vacancies,” she said, adding that the program is innovative and sustainable because of the way it recycles repaid loans for prospective students.
The program will pay tuition for 200 to 300 students enrolled in each of the following programs: nursing at Hudson County Community College, cybersecurity at New Jersey Institute of Technology, and heating, ventilation, and air conditioning (HVAC) training at Camden Community College. It will last five years in this phase.
Eight New Jersey companies, BD, Campbell Soup Company, Johnson & Johnson, Merck & Co., Prudential Financial, PSEG, RWJBarnabas Health and Verizon have made private donations to the fund amounting to approximately $5 million. The state is providing $7.5 million in credits, bringing the total amount available for the Pay It Forward program to $12.5 million.
Programs that stand to benefit from Pay It Forward are: New Jersey Institute of Technology’s Cybersecurity Professional Bootcamp, a 10-month part-time online training program designed for careers in cybersecurity; the Hudson County Community College Nursing Program, a full-time, two-year associate degree program designed for registered nursing careers; and courses in heating, ventilation and air conditioning (HVAC) or welding at Camden County College.
Murphy and others at the event said they hope the program will become a national model.