Did you have defaulted student loans before the forbearance/pause began on March 13, 2020? The U.S. Department of Education (ED) has announced a one-time temporary program called Fresh Start, that offers special benefits for borrowers to get their student loans out of default. 

Q: What is default?

A: Default is the failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you will default if you have not made a payment in more than 270 days.

Borrowers that had student loans in default prior to the pause in 2020 will need to enter the Fresh Start program. Fresh Start is accessible now, and it can set you up for success once payments resume. It doesn’t require a lump sum of cash to catch up or a loan consolidation.

Q: What are the automatic benefits of Fresh Start?

  • Access to Federal Student Aid
  • Stopped Collections
  • Eligibility for Other Government Loans
  • Restored Ability to Rehabilitate Loans
  • Credit Reporting Changes

Q: Are there additional benefits to using Fresh Start?

  • Access to Income-Driven Repayment (IDR) Plans
  • Access to Student Loan Forgiveness Programs
  • Access to Short-term Relief (Forbearance and Deferment)

One of the main benefits of the Fresh Start program is that it will restore access to federal student aid such as loans and grants. In order to take advantage of the program, there are steps you must take.

Your first step is to contact your loan holder. If your loans are held by the Department of Education, you can complete this process online, by phone, or by mail. Visit studentaid.gov for additional details and get the information you’ll need to have on hand in order to complete your enrollment.

If your loans are not held by the Department of Education (typically due to the loan being a FFEL Program loan) they are likely held by a guaranty agency. You’ll need to contact that agency. Visit this site to find the contact information for your guaranty agency.

The Fresh Start program is a great opportunity to get your loans back on track and could benefit your credit as well. The program is temporary so don’t delay. Visit the Fresh Start page on studentaid.gov to confirm that your specific loans are eligible and enroll today.

If you would like to learn more about the program, NerdWallet has a great article for student loan borrowers that you can read here.

If you have additional questions, reach out to your credit building counselor or to us at info@workingcredit.org, and we can answer your questions or point you to the right person!