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HomeAnnouncements & EventsA Fresh Start for Federal Student Loan Borrowers in
Default
ON THIS PAGE

Enroll in Fresh Start to Get Out of Default
Enroll In an Affordable Repayment Plan
Benefits of Fresh Start
Which Loans Are Eligible
Frequently Asked Questions (FAQs)
ON THIS PAGE


Enroll in Fresh Start to Get Out of Default
Enroll In an Affordable Repayment Plan
Benefits of Fresh Start
Which Loans Are Eligible
Frequently Asked Questions (FAQs)


GET OUT OF DEFAULT WITH FRESH START

Fresh Start is a temporary program from the U.S. Department of Education (ED)
that offers special benefits for borrowers with defaulted federal student loans.
Fresh Start ends Sept. 30, 2024.

Fresh Start automatically gives you some benefits, such as restoring access to
federal student aid (loans and grants). But you need to act to claim the full
benefits of Fresh Start and get out of default. Sign up for Fresh Start for free
using one of the methods below.


ENROLL IN FRESH START TO GET OUT OF DEFAULT

To use Fresh Start to get out of default, you must contact your loan holder. If
your loans are held by ED, you can contact us using one of the three methods
below. If your loans are held by a guaranty agency, you’ll need to call that
agency. Find contact information for guaranty agencies.

If you don’t know who holds your loans, call 1-800-621-3115 (TTY
1-877-825-9923).

You must use one of the methods below before Oct. 1, 2024, to enroll in Fresh
Start.

THREE WAYS TO CONTACT US ABOUT FRESH START

This process can take less than 10 minutes.

Online—Go to myeddebt.ed.gov and log in to your account. This is the easiest
option if you know your login.

Phone—Call us at 1-800-621-3115 (If you are deaf or hard of hearing, the TTY
number is 1-877-825-9923).

 * What to expect on the phone: It will take about 10 minutes. A representative
   will ask for some information to find your record, then ask why you are
   calling (your answer: Fresh Start, to get out of default). You will also get
   an opportunity to indicate interest in an income-driven repayment plan, which
   likely will qualify you for a lower monthly payment than a standard plan.

   

Mail—Write to P.O. Box 5609, Greenville, TX 75403. In your letter, include your
name, social security number, date of birth, current mailing address, and the
following: “I would like to use Fresh Start to bring my loans back into good
standing.” Letters must be postmarked before Oct. 1, 2024.


WHAT HAPPENS NEXT

If you use Fresh Start to get out of default, here’s what will happen:

 * We’ll transfer your defaulted loans from the Default Resolution Group (or
   from a guaranty agency) to a loan servicer.

 * We’ll return your defaulted loans to “in repayment” status.

 * We’ll remove the record of your default from your credit report.

 * You’ll receive communication from your new loan servicer once your loans have
   been transferred. Within a week or so after, you’ll be able to apply for an
   IDR plan.

   


ENROLL IN AN AFFORDABLE REPAYMENT PLAN

When you get out of default, you’ll automatically be put on the Standard
Repayment Plan. But most borrowers enrolling in Fresh Start (about 80%) choose
to apply for an income-driven repayment (IDR) plan.

An IDR plan customizes your monthly payment to your income. You will never pay
more than 10–20% of your discretionary income. Half of borrowers on Fresh Start
are paying $0 a month, and 60% of Fresh Start borrowers are paying less than $50
a month.

You can’t apply for an IDR plan until we finish processing your Fresh Start
enrollment. This may take a couple weeks.

If you go to the IDR application and it says you aren’t eligible, you’ll likely
need to keep waiting for your Fresh Start enrollment to update in our systems.

If you apply for an IDR plan close to your servicer’s bill issue date or before
your payment due date, your servicer will place you in a forbearance status for
the upcoming billing cycle so that you don’t pay more than you need to. Your
servicer will also place you in forbearance if they can’t process your
application before these dates.


ESTIMATE YOUR MONTHLY PAYMENT

You can get your estimated monthly payment by using Loan Simulator (select “I
Want to Find the Best Student Loan Repayment Strategy”).

ESTIMATE YOUR PAYMENTS WITH LOAN SIMULATOR


BENEFITS OF FRESH START


AUTOMATIC BENEFITS

All defaulted borrowers temporarily have these benefits through Sept. 30, 2024.
But you must use Fresh Start to get out of default to keep these benefits
long-term.

Access to Federal Student Aid

If you’re eligible for Fresh Start, you can now access federal student aid
again. You can apply for federal grants and loans if you want to go back to
school. This may help you complete an unfinished degree, possibly making it
easier to repay your loans.

Fill out the Free Application for Federal Student Aid (FAFSA®) form now.

Stopped Collections

The collections relief you’ve gotten during the COVID-19 payment pause continues
during Fresh Start. You’ll continue to get the following collections relief:

 * Tax refunds (and child tax credits) will not be withheld.

 * Wages will not be garnished.

 * Social Security payments (including disability benefits) will not be
   withheld.

 * Collection calls will not be made.

   

Eligibility for Other Government Loans

We stopped reporting your default status in the government credit reporting
system (CAIVRS).

Many lenders, especially for loans that are backed by the government, will
reject applicants who are marked as “in default” in the government credit
reporting system. With this Fresh Start benefit, you may become eligible for
certain types of government-backed loans, such as mortgages.

Restored Ability to Rehabilitate Loans

Normally, you can rehabilitate a loan only one time. But Fresh Start will not
count as your one chance at rehabilitating your loan(s).

For example, say you've never rehabilitated your loan before. You use Fresh
Start to get your loan out of default, but your loan goes into default again
later. In this case, you will still have the option to rehabilitate your loan.

The same is true for rehabilitating during the COVID-19 student loan payment
pause. If you rehabilitated your loan(s) during the payment pause, that won’t
count as your one chance at rehabilitating your loans.

Credit Reporting Changes

Starting in December 2022, we began reporting defaulted loans held by ED as
“current” rather than “in collections” to credit reporting agencies.




ADDED BENEFITS IF YOU USE FRESH START TO GET OUT OF DEFAULT

You can now use Fresh Start to get out of default. Claim your Fresh Start to
keep the benefits listed above and get access to the benefits listed below.

Access to Income-Driven Repayment (IDR) Plans

Under an IDR plan, your monthly payment amount can be as low as $0. That’s
because on an IDR plan, your monthly payment is based on how much money you make
(income) and your family size.

Access to Student Loan Forgiveness Programs

Defaulted loans are not eligible for any of our student loan forgiveness
programs. But if you take advantage of Fresh Start, you’ll get out of default
status. Then you’ll regain the ability to apply for forgiveness programs,
including Public Service Loan Forgiveness.

Access to Short-term Relief (Forbearance and Deferment)

When you go into default, you lose access to short-term relief options,
including forbearance and deferment. Because of Fresh Start, you’ll be able to
get out of default. Then you’ll be able to request short-term relief, if you
choose.




WHICH LOANS ARE ELIGIBLE

Eligible
Not eligible
 * Defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans
 * Defaulted Federal Family Education Loan (FFEL) Program loans
 * Defaulted Perkins Loans held by ED

 * Defaulted Perkins Loans held by schools
 * Defaulted Health Education Assistance Loan Program loans
 * Student loans remaining with the U.S. Department of Justice for ongoing
   litigation
 * Direct Loans that default after the end of the COVID-19 student loan payment
   pause
 * FFEL Program loans that default after the end of the COVID-19 student loan
   payment pause

Note: FFEL Program loans that defaulted during the COVID-19 payment pause will
be taken out of default as a result of the expansion of COVID-19 relief. These
loans aren't eligible for Fresh Start.

If you’re not sure whether your loans qualify, you can call the Default
Resolution Group at 1-800-621-3115 (TTY for the deaf or hard of hearing
1-877-825-9923).


FREQUENTLY ASKED QUESTIONS (FAQS)

How long will it take for my Fresh Start application to go through?

It takes 4–6 weeks for most people be transferred to their new non-default
servicer.

You’ll get communications about your transfer by postal mail. Has it been more
than 45 days since you asked to use Fresh Start to get out of default, and you
haven’t received any communications? If so, reach out to the Default Resolution
Group to make sure your contact information is correct.

You don’t have to wait for your transfer if you want to apply for student aid.
You can fill out the FAFSA® form right now!

How do I get proof that I’m enrolled in Fresh Start?

To get proof of your enrollment in Fresh Start, contact the Default Resolution
Group. You might be asked for proof that you’re enrolled in Fresh Start if, for
example, you’re applying for new financial aid and reenrolling in school.

Can Fresh Start affect my applications for other relief?

No, Fresh Start won’t affect your applications for other relief. If you use
Fresh Start to get out of default, we will process most types of discharge
applications before we send your loan to your new servicer. If you have a
borrower defense application, that information will be shared with your new
servicer.

What if I go into default again later?

If you go into default again after Fresh Start, we’ll use your loan’s original
date of delinquency in the information we provide to credit reporting agencies.
That means that Fresh Start won’t reset how long credit reporting agencies
report your loan as delinquent or in default.

If you’ve been delinquent on a loan for more than seven years, that defaulted or
delinquent loan doesn’t show up on your credit report anymore. If you’re in this
situation, we will make sure you won’t get a default or delinquency reported for
the loan anymore. So if you take advantage of Fresh Start but default or become
delinquent again, that defaulted loan won’t show up on your credit report if it
has been at least seven years since you first became delinquent on the loan.

If you take out a new loan during or after Fresh Start, that new loan won’t be
affected by Fresh Start. So if you default on that new loan, it will be reported
to credit reporting agencies, and you will experience all the regular effects of
default.






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