State to cover student loan default fee

Trenton — The New Jersey Higher Education Student Assistance Authority (HESAA) will once again pay the default fee required on federal student loans. In 1996 the federal government began assessing a 1 percent default fee against federal student loans to offset the cost of potential defaults. This effectively reduces the amount that the student actually receives to pay college costs. “Covering the federal default fee provides a direct benefit to borrowers,” said Michael Angulo, HESAA’s executive director. “The decision by our board reflects HESAA’s strong commitment to reducing the cost of college. This is particularly welcome to students and families facing economic uncertainty due to the national recession,” he added. As a non-profit entity, HESAA uses its operating revenue towards enhancing financial aid programs, services, and outreach. “New Jersey is one of the top states in generating college bound high school seniors, and is among the top two states in providing need based aid to students,” said Angulo. For the upcoming academic year, HESAA estimates that it will cover approximately $4.8 million in fees that would otherwise have been charged to students. To date, HESAA has saved New Jersey students more than $44 million in default fees. For more information visit www.hessa.org or call 1-800-792-8670.