Fresh Start Program for Student Loans
Federal student loans default after 270 days of missed payments. However, if you apply for the Fresh Start Program before Sept. 30, 2024, you can get your loans back into good standing and regain access to federal benefits, such as income-driven repayment and forgiveness programs.
Plus, the Fresh Start program will remove the record of student loan default from your credit report. If your federal loans are in default, learn how to take advantage of this temporary program before it ends.
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What is the Fresh Start program for student loans?
The Fresh Start program is a one-time program for getting federal student loans out of default. It has temporarily replaced student loan rehabilitation but is only available until the end of September 2024.
If your loans are in default, you’re already getting some of the benefits of Fresh Start automatically. These include:
- Ability to access financial aid: Normally, you’re not eligible for financial aid if you have any student loans in default. Thanks to Fresh Start, you can access federal grants, work-study, and other loans that could help you return to school. You’ll also regain access to government-backed loans, such as FHA mortgages.
- Stopped collections: The government paused collections activity on defaulted student loans during the COVID-19 emergency forbearance and will continue to do so through the fall of 2024. You won’t get collections calls or have your wages, tax refund, or Social Security benefits garnished.
- Credit reporting changes: During this Fresh Start program, the Department of Education will report your loans as current to the credit bureaus, which can help protect your credit score.
- Option to use rehabilitation again: Fresh Start has temporarily replaced student loan rehabilitation to get student loans out of default. Normally, you can only use rehabilitation once, but Fresh Start won’t count against this one chance. You can also use rehabilitation if your loan goes into default again.
You must sign up for Fresh Start before the deadline to continue enjoying the above benefits. After you enroll, you’ll also get these perks:
- Return to active loan status: Your loans will go back into “in repayment” status and go to a new loan servicer.
- No more record of default on your credit report: The Department of Education will remove the default from your credit history.
- Eligibility for repayment plans and other protections: Your loans will automatically go on the standard 10-year plan, but you can sign up for another option, such as income-driven repayment. In fact, 80% of Fresh Start borrowers go on an IDR plan, and about half qualify for a $0 monthly payment. You’ll also be able to use deferment and forbearance again.
- Access to forgiveness programs: Your loans will become eligible for federal forgiveness programs, such as Public Service Loan Forgiveness.
Who is eligible for Fresh Start?
Any federal student loan borrower who defaulted on their student loans before the COVID-19 payment pause is eligible for Fresh Start.
You are still eligible even if you’ve used student loan rehabilitation or consolidation to get your loans out of default in the past. However, you wouldn’t be eligible if you defaulted after the payment pause ended.
Fresh Start student loans
Here are the loans that are eligible for Fresh Start.
| Eligible | Not eligible |
| Federal Direct Loans | Perkins loans held by schools |
| Federal Family Education Loans (FFEL) | Health Education Assistance Loan Program loans |
| Perkins loans held by the Department of Education | Student loans involved in ongoing litigation with the U.S. Department of Justice |
| Direct or FFEL Program loans that defaulted after the end of the Covid-19 payment pause |
If you’re not sure if your student loans qualify for Fresh Start, call the Default Resolution Group at 800-621-3115 (TTY number is 877-825-9923) for help.
What to know before applying for the Fresh Start
The Fresh Start program has several advantages for borrowers in default, but there are still some considerations to make, even though they aren’t necessarily disadvantages. Make sure to review these noteworthy items before you apply.
Advantages of Fresh Start
- It’s the fastest way to get out of default: You don’t have to jump through many hoops to sign up for Fresh Start, and your loans will be returned to good status within four to six weeks. By contrast, student loan consolidation sometimes requires you to make three payments before you can use it to get your loans out of default, while rehabilitation requires nine payments over 10 consecutive months.
- It can restore access to federal benefits: After signing up for Fresh Start, you will be restored to access federal financial aid, have collections activities paused, and be eligible for federal repayment plans and forgiveness programs.
- It can remove default from your credit report: After you sign up for Fresh Start, you should see your student loan default drop off your credit report. Removing this default can improve your credit and make it easier to take out a loan, open a credit card, or rent an apartment in the future.
Noteworthy considerations of FreshStart
- There’s a deadline to apply: Fresh Start isn’t around forever. The deadline to apply is September 30, 2024. For incarcerated students with loans in default, the deadline is August 31, 2024.
- You’ll lose current benefits if you don’t take action: If you have student loans in default, you’re already getting some benefits automatically from the Fresh Start program. However, you’ll lose these benefits if you don’t apply for Fresh Start before the deadline.
- Not all loans are eligible: Some federal loans aren’t eligible for Fresh Start, such as Perkins loans and Health Education Assistance Loan Program loans. Plus, your loans aren’t eligible if they fell into default after the end of the Covid-19 payment pause.
Any person who has student loans in default, meets the requirements, and wants to get back on track is a great candidate for the Fresh Start program. Taking advantage of the program before the deadline can help you avoid the negative repercussions of the collections process.
How to apply for Fresh Start
One of the easiest ways to apply for Fresh Start is online. Here are the steps you’ll need to take:
1. Head to myeddebt.ed.gov to begin signing up for Fresh Start.
2. Click on the “Borrower/Student: I have defaulted student loans” button to go to the login page. Once there, log in with your FSA ID, which is your unique username and password.
3. Provide the requested information and request that your loans be returned to active status via the Fresh Start program.
You also have two alternative options for signing up for Fresh Start:
- Call the Default Resolution Group: You can sign up for Fresh Start over the phone by calling 800-621-3115 (TTY number is 877-825-9923). Expect this call to take about 10 minutes.
- Send your request by mail: You can also send a request to enroll in Fresh Start to P.O. Box 5609, Greenville, TX 75403. Make sure to include your name, date of birth, mailing address, and Social Security number on your letter.
According to the Department of Education, your loans usually take four to six weeks to be transferred to a new loan servicer. Once your loans have been transferred and returned to active status, you can sign up for a repayment plan.
FAQ
How does Fresh Start for student loans differ from loan forgiveness programs?
The Fresh Start program focuses on rehabilitating and restructuring student loans. Unlike loan forgiveness programs, which cancel a portion or the entirety of your debt, Fresh Start aims to make repayment more manageable by lowering monthly payments and interest rates.
Essentially, it provides a second chance to borrowers struggling to meet their loan obligations rather than absolving the debt altogether.
Fresh Start also extends its benefits to a broader range of borrowers. While loan forgiveness programs often target specific careers or income levels, Fresh Start is generally available to any eligible borrower. This makes it a versatile option for diverse financial situations.
What documentation must I provide for the Fresh Start program?
You must gather several documents to apply for the Fresh Start program. These include your most recent tax returns, proof of income, such as pay stubs or W-2 forms, and a list of all your current debts. You may also need to provide a detailed budget outlining your monthly expenses.
It’s important to organize and prepare this documentation. Accurate and complete information can expedite the application process and improve your acceptance chances.
How long does the application for Fresh Start take?
The time frame for the Fresh Start application can vary. Generally, it takes a few weeks before you submit your application to receive a decision. Initial processing might take one to two weeks, followed by a period for reviewing your documentation and financial situation.
On-time submission and completeness of your documents can help speed up the process. However, complex financial circumstances or missing information can cause delays. Be proactive and thorough to ensure a smooth and expedited application process.
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