Fresh Start Initiative
Fresh Start will continue through one year after the COVID-19 payment pause ends.
Borrowers with federal student loans in default will be able to reenter current repayment status and have other federal student aid benefits and protections restored that will increase their long-term repayment success.
On April 6, 2022, the U.S. Department of Education (ED) announced it would eliminate the negative effects of default for borrowers with defaulted federal student loans. This will enable approximately 7.5 million borrowers with defaulted federal student loans to return to repayment without any past due balance, just like every other borrower. These borrowers are disproportionately likely to be first generation college students, have received a Federal Pell Grant, and qualify for low monthly payments under affordable income-driven repayment (IDR) plans.
This initiative, called “Fresh Start,” will increase the long-term repayment success of borrowers with defaulted federal student loans, provide substantial benefits to borrowers over the coming months, and last for a period of one year from the end of the payment pause, as described below.
These borrowers will also have the ability to enroll in an income driven repayment plan or access other repayment options that suit their needs. This Fresh Start initiative will remain available to previously defaulted borrowers, as identified above, for one year after the end of the COVID-19 pandemic student loan payment pause. Simply put, these borrowers will have at least one year to make payment arrangements before defaulting on their debts and/or being subject to further collections efforts like most other borrowers eligible for the payment pause.
Benefits of Fresh Start for Eligible Loans
- Restores access to repayment options—that could offer monthly payments as low as $0 through IDR plans—and provide opportunities for loan forgiveness
- Restores eligibility to receive federal student aid, including Federal Pell Grants and campus-based aid like Federal Work-Study, so borrowers can complete their course of study and increase long-term repayment success
- Protects borrowers from involuntary collection efforts and costly collection fees
- Restores eligibility for future rehabilitation for borrowers who rehabilitated a defaulted loan during the payment pause
- Provides credit reporting features—including removing borrowers from the federal Credit Alert Verification Reporting System (CAIVRS)—making it potentially easier and more affordable for student loan borrowers to afford living expenses
- Defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Defaulted Federal Family Education Loan (FFEL) Program loans (both ED-held and commercial held)
- Defaulted ED-held Perkins Loans
Commercial-held FFEL Program loans that defaulted after March 13, 2020, through the duration of the payment pause, will be returned to current standing through ED’s action to expand COVID-19 flexibilities. Because these loans will be returned to current standing, they are not eligible for Fresh Start benefits.
Loans Not Eligible:
- Defaulted school-held Perkins Loans
- Defaulted Health Education Assistance Loan Program loans
- Student loans remaining with the U.S. Department of Justice (DOJ)
- Direct Loans and commercial-held FFEL Program loans that default after the end of the pause on student loan payments and collections
If unsure if your loans will qualify for Fresh Start, please contact Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hard of hearing 1-877-825-9923).
Process for Students Returning to School with a loan default
- A Free Application for Federal Student Aid is required to notify the institution of your intent to return to school.
- Once we receive your FAFSA, we will review your eligibility for the Fresh Start Initiative based on which loans are in default and when.
- If you qualify, a form will be added to your To Do List to complete.
- Once the form is returned, we can proceed in awarding Title IV aid.
Process for Parents Applying for a Parent PLUS Loan with a default
- A Parent PLUS Loan application will need to be submitted to notify the institution of your intent to receive Title IV aid.
- Once we receive the PLUS Loan application, we will review the parent's eligibility for the Fresh Start Initiative.
- If eligible, a form will be sent to the parent's email on file. This will include next steps, additional information about Fresh Start, and page that requires a signature. This signature page needs to be returned to our office.
- Once we have received the form, we will review the information again and let the parent know how to proceed.