TRENTON – Democratic legislation that would create a loan forgiveness program for students who pursue work in fields with labor shortages was advanced Tuesday by an Assembly committee.
“We’re targeting job creation for all New Jerseyans, but we also have to remember that this economy is also very tough for our young residents,” said Assembly Speaker Sheila Oliver (D-Essex/Passaic). “With a plan like this, we can tackle two concerns — finding work for our young residents and giving them an incentive to target their outstanding talents to areas of need. It’s a win-win for everyone.”
The bill would establish the Workforce Shortage Loan Redemption Program within the Higher Education Student Assistance Authority.
It would provide for the redemption of a portion of the eligible qualifying loan expenses of program participants for each year of service in a field in which a shortage of qualified labor exists in the state.
To be eligible to participate in the program an applicant must be:
- A resident of the state;
- A graduate of an associate’s, baccalaureate or advanced degree program from an in-state institution of higher education in an academic discipline appropriately related to a field in which there is a shortage of qualified labor; and
- Agree to perform the required service obligation.
The bill (A-955) would establish a 13-member Workforce Shortage Loan Redemption Council.
The council would consist of: the Executive Director of the Economic Development Authority, the Commissioner of Labor and Workforce Development, the Executive Director of the Commission on Higher Education, and the chairperson of the State Employment and Training Commission, or their designees.
The council will also include nine public members, three each appointed by the Governor, the President of the Senate, and the Speaker of the General Assembly. The public members will represent persons from the business community, the labor community, and the higher education community.
The council, every five years, would identify no more than three fields in which there is a shortage of qualified labor in the state and recommend to the governor that these fields be included in the Workforce Shortage Loan Redemption Program.
Under the provisions of the bill the governor would review the council’s recommendations and forward to the Legislature his recommendations on which fields to include in the program. If the Legislature does not disapprove the governor’s recommendations by concurrent resolution within 60 days, then the governor’s recommendations would be deemed approved, and persons who have graduated with a degree in an academic discipline appropriately related to one of the designated fields would be eligible to participate in the loan redemption program.
A student who is eligible and interested in participating in the loan redemption program would sign a contract with the authority upon the completion of the final year of studies. The agreement would specify the applicant’s dates of required service and the total amount of eligible qualifying loan expenses to be redeemed by the state in return for that service.
Maximum redemption of loans under the loan redemption program would amount to 18 percent of principal and interest of eligible qualifying loan expenses in return for one full year of service in a field in which there is a shortage of qualified labor in the State, an additional 18 percent for a second full year of service, an additional 19 percent for a third full year of service, and an additional 20 percent for a fourth full year of service.
A program participant would be able to redeem loans up to a maximum of 75 percent of eligible qualifying loan expenses.
Maryland has a similar program.
The bill was released 8-2 by the Assembly Budget Committee.