Measures Generate College Education Savings and Provide Student Loan Relief
(TRENTON) – To support those in New Jersey busy paying off, contributing to, and saving up for college tuition, the Governor today signed the New Jersey College Affordability Act into law.
Part of the Fiscal Year 2022 State Budget priorities, the former bill (A-12) now law will provide over $100 million in higher education savings and loan relief. It is sponsored by Assembly Speaker Craig J. Coughlin alongside Assembly Democrats John F. McKeon, Mila Jasey, Angela McKnight, and Nicholas Chiaravalloti.
“For the families wanting to help send their kids to college, for young professionals shouldering the burden of student loan debt, and for anyone currently in school, this measure really matters,” Speaker Coughlin (D-Middlesex). “Anyone who wishes to pursue a university degree should be able to do so. While several factors can act as barriers to the accessibility of higher education, through stronger tax relief we’re making sure cost for individuals and families doesn’t have to stand in the way.”
Tax reforms implemented will apply to households making up to $200,000 in annual income. Under the new law, up to $10,000 in contributions to the state-administered 529 College Savings Plan, New Jersey Better Educational Savings Trust (NJBEST), will be deductible from gross income. Additionally, $2,500 of New Jersey College Loans to Assist State Students (NJCLASS) principal and interest loan amounts paid will be deductible.
“Young people and families taking steps toward further education shouldn’t be penalized by the tax code for good financial planning or later down the line when paying down their loans,” Assemblyman McKeon (D-Essex, Morris). “Enabling individuals and families to make these significant tax-free payments toward schooling, whether it’s before, during or after, offers everyone more financial stability and breathing room.”
Also provided under the new law is a deduction of up to $10,000 on gross income for currently enrolled students on payments made directly toward in-State college tuition. This is applies to individual taxpayers as well as for any spouse or dependent.
“As we ease out of the pandemic and into a period of steady recovery, suspensions of monthly student loan payments will also be coming to an end,” said Assemblywoman Jasey (D-Essex, Morris). “These new tax deductions recognize the large investment that a college degree requires providing relief that could work to stretch people’s paychecks that much further.”
Under the bill, matching grants of up to $750 would also be available to lower-income families making up to $75,000 when initially opening up an NJBEST account.
“Giving lower-income families and residents these grants can help incentivize positive financial habits,” said Assemblywoman McKnight (D-Hudson). “With the right tools, college savings contributions and even tuition payments don’t have to be so daunting.”
“What’s good for our students is good for the future of our state’s economy,” said Assemblyman Chiaravalloti (D-Hudson). “These measures take very meaningful steps alongside others taken in the Legislature to lower barriers to higher education access.”
Passed by the Assembly and Senate unanimously last Thursday, the law takes effect immediately.