NJ College Affordability Act Signed Into Law: What It Does

NEW JERSEY — College will become more affordable for some in the Garden State, as Gov. Phil Murphy signed the New Jersey College Affordability Act into law Tuesday. Under the bill, taxpayers with a gross income of $75,000 or less who open a New Jersey Better Educational Savings Trust (NJBEST) account would be eligible for a one-time grant of up to $750 in a dollar-to-dollar match of the initial account deposit.

Additionally, taxpayers making $200,000 or less become eligible for a gross income tax deduction for the amounts contributed to the NJBEST account. Deductions will not exceed $10,000 in contributions.

These taxpayers would also become eligible to deduct up to $2,500 from gross income for the amount of principal and interest paid on a student loan, under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program.

Lastly, taxpayers with a gross income of $200,000 or less would become eligible to deduct the amounts paid toward in-state tuition, not exceeding $10,000.

The Senate unanimously approved the bill. The law, for which $10 million is appropriated, is designed to make college more affordable and provide financial incentives for pursuing higher education.

“These incentives will hopefully encourage more families to start a college fund for their children, giving them more freedom in deciding where they want to pursue a college degree,” said State Senator Dawn Addiego.

The average cost for attending a four-year college in the United States increased 497 percent between the 1985-86 and 2017-18 academic years — nearly twice the rate of inflation — according to Forbes. Bachelor's degrees cost an average of $5,504 to pursue in 1985, compared to $27,357 in 2017, according to the U.S. Department of Education.

In that span, the average price of a two-year education jumped from $3,367 per year to $10,704 — a 320 percent hike — according to the agency. Inflation increased 235 percent from January 1985 to January 2018, according to the federal inflation calculator.

The median household income in New Jersey has only increased 34.4 percent since the mid-1980s. The median went from $65,279 in 1984 to $87,276 in 2019, according to the U.S. Census Bureau.

Many universities froze tuition during the pandemic. But some major institutions, such as Rutgers University, will raise tuition for the 2021-22 school year. The university's board of governor's approved last week a 2.6 percent hike in tuition and fees as part of its budget. Read more: Coronavirus Freeze Ends: Rutgers Hikes Tuition, Fees By 2.6%

"We know that tuition increases are difficult for our students, especially after a challenging year, and we would avoid any increase if the numbers would allow it," said Board Chair Mark Angelson.