‘Fresh Start’ Program: How to Get Defaulted Student Loan Relief in 2024
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The government’s temporary Fresh Start program lets you get defaulted student loans back into good standing.
The deadline to sign up for Fresh Start is Sept. 30, 2024.
You could get $0 monthly payments if you sign up for the SAVE repayment plan after Fresh Start.
In April 2022, the government introduced a temporary “Fresh Start” program that allows millions of borrowers who defaulted on their federal student loans to get them back into good standing. Benefits of the Fresh Start program include:
Loans returned to "current" status on credit reports, and negative default marks removed.
Access to federal student aid and other government loans, like mortgages.
Access to flexible repayment plans, like the new income-driven repayment plan, SAVE, which could give you $0 bills if your income is low enough.
Access to short-term relief, like deferment or forbearance.
Suspension of involuntary debt collection efforts.
Some benefits, such as restored access to federal student aid, are available automatically to all borrowers in default through September 2024. However, you must enroll in the program by Sept. 30, 2024 to get out of default and gain permanent access to the full suite of Fresh Start benefits — including the temporary, automatic ones.
Time is running out to sign up for the Fresh Start program, and it can transform the lives of borrowers with defaulted student loans. Enrollment is free: it doesn't require a lump sum of cash to catch up or loan consolidation. If you miss the Fresh Start deadline and let your loans stay in default after September, you could face harsh consequences like wage garnishment and hits to your credit score.
Here are the details to know about Fresh Start, including how to sign up.
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Who qualifies for the Fresh Start program?
Approximately 7.5 million borrowers have federal student loans in default, according to federal data, and could benefit from the Fresh Start program.
These loans are eligible for the Fresh Start program:
Government-held Perkins loans.
The following loans are not eligible for the program:
Private student loans.
Commercially held Perkins Loans.
Loans under the purview of the U.S. Department of Justice.
Direct or FFELP loans that defaulted after student loan payments resumed in October 2023.
How to sign up for the Fresh Start program
Borrowers need to opt into Fresh Start to get their loans out of default and access the program’s full benefits. The deadline to sign up is Sept. 30, 2024. If borrowers don’t enroll in Fresh Start, they will lose all benefits starting in October. More information about the program is available on the Federal Student Aid office's website.
The Education Department’s Default Resolution Group holds most defaulted loans. If that includes your loans, there are three ways you can submit a Fresh Start request:
Online. Log into your account on myeddebt.ed.gov and sign up on the website.
By phone. Call the Default Resolution Group at 1-800-621-3115. The process should take no more than 10 minutes. If possible, look up your income on your most recent federal tax return and have the information ready before calling.
By mail. Write a letter that includes your name, Social Security number, date of birth, and the following sentence: “I would like to use Fresh Start to bring my loans back into good standing.” Address your letter to: P.O. Box 5609, Greenville, TX 75403.
After enrolling in Fresh Start, you must make payment arrangements with the Default Resolution Group. After a long-term payment plan is agreed upon, your loans will be transferred to a new federal student loan servicer and default marks will be removed from your credit report.
If you have FFELP loans, you’ll sign up for Fresh Start through the guaranty agency that holds your loans. (If you don’t know who holds your loans, call the Default Resolution Group at 1-800-621-3115 and ask.)
The government said it will reach out to eligible borrowers to inform them of the Fresh Start program, but don’t count on it. Roughly 25% of borrowers in default do not have an email address on record with the Education Department, according to a January 2022 report from the Government Accountability Office. If you’ve not updated the contact information on your loan account, you could miss the heads up.
Fresh Start for incarcerated student loan borrowers
Incarcerated borrowers can also sign up for the Fresh Start program if they have a student loan in default. This can allow them to access Pell Grants to pay for Prison Education Programs. These borrowers should send a letter to: P.O. Box 5609, Greenville, TX 75403.
In your letter, include your full name, Social Security number, date of birth and the following statement: “I am a confined or incarcerated individual. I would like to use Fresh Start to bring my loans back into good standing.”
Key benefits of the Fresh Start program
If you have student loans in default, you already have temporary access to these Fresh Start benefits:
Access to federal student aid and other government loans. Borrowers with defaulted student loans can access federal student aid — including federal loans, work-study and Pell Grants — and other government-backed loans, like mortgages.
No debt collections. All collections activities and fees through the Treasury Offset Program on federal student loans in default are suspended: wage garnishment, seized tax refunds and child tax credits, withheld Social Security payments (including disability benefits) and collection calls. Borrowers who don’t enroll in Fresh Start can expect collections activities to resume in October.
A second shot for borrowers who rehabilitated and defaulted. Usually, you can only rehabilitate a defaulted student loan once. Fresh Start does not count as your one rehabilitation attempt, so if your loan goes into default again later, you will still have the option to rehabilitate your loan.
Changes to credit reporting. The Education Department has begun reporting defaulted student loans as “current” rather than “in collections” to credit bureaus.
Enrolling in Fresh Start will lift your loans from default, lock in the program’s temporary perks and give you access to the following additional benefits:
Negative marks of default removed from credit reports. This can lead to an increased credit score, which may make it easier to qualify for favorable interest rates.
Access to income-driven repayment (IDR) plans. Roughly 80% of borrowers who sign up for Fresh Start opt for an IDR plan, according to the Education Department. As a result, half of Fresh Start borrowers are paying $0 a month, and 60% of Fresh Start borrowers are paying less than $50 a month.
Access to student loan forgiveness programs. You can benefit from forgiveness programs like Public Service Loan Forgiveness, as long as you meet the eligibility criteria.
Access to short-term relief. You’ll be able to request a student loan forbearance or deferment in the future.
