• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

The College Investor

Student Loans, Investing, Building Wealth

  • About
  • Podcasts
  • Research
  • Contact
  • Save For College
      • How To Start

      • How To Save For College
      • How To Pay For College
      • What Is the Average Cost of College?
      • What Is A 529 Plan and Where to Open One in Your State
      • How Much Should You Have In A 529 Plan By Age
      • How To Use A 529 Plan For Private Elementary And High School
      • What Are Qualified Expenses For A 529 Plan (And What Doesn’t Count)?
      • The Best Brokers To Open A 529 Plan
      • Tools + Accounts

      • 529 Plans: The Ultimate College Savings Plan
      • 529 Plan Contribution Limits
      • Prepaid Tuition Plans | What To Know
      • Understanding And Using 529A ABLE Accounts
      • Using A Roth IRA To Save And Pay For College
      • FAFSA Deadlines for Financial Aid
      • CollegeBacker Review
      • Upromise Review
      • UNest Review
      • Other Options

      • Student Loan And Financial Aid Programs By State
      • The Guide To Military And VA Education Benefits
      • How To Fill Out The FAFSA
      • How To Find College Scholarships
      • The Best College Scholarship Search Websites
      • How To Find Grants To Pay For College
      • Pell Grants: What They Are And How To Qualify
      • Understanding Federal Work-Study
      • How To Use A 529 Plan If Your Child Doesn’t Go To College
  • Student Loans
      • Borrowing

        • How Student Loans Work
        • How To Apply For A Student Loan
        • Best Student Loans And Rates In March 2023
        • 10 Best Private Student Loans Of March 2023
        • Best Student Loans To Pay For Graduate School
        • Best Student Loans To Pay For Medical School
        • Parent Loans To Pay For College
        • No-Cosigner Student Loan Options
        • Guide To Income Sharing Agreements (ISAs)
        • Best International Student Loans
      • Get Out Of Debt

        • Best Student Loan Refinance Companies In March 2023
        • Best Student Loan Repayment Plans
        • Best Student Loan Refinancing Bonuses And Promotional Offers Of March 2023
        • Student Loan Forgiveness Programs (The Complete List)
        • The Full List Of Student Loan Forgiveness Programs By State
        • Public Service Loan Forgiveness (PSLF)
        • Top Student Loan Scams
        • Average Student Loan Monthly Payment
        • Average Student Loan Debt By Year
      • Reviews

        • Credible Review
        • Splash Review
        • Ascent Review
        • Citizens Bank Review
        • Commonbond Review
        • Earnest Review
        • ELFI Review
        • Laurel Road Review
        • LendKey Review
        • SoFi Review
  • Investing
      • How To Start

        • How To Start Investing in High School
        • How To Start Investing In College
        • How To Start Investing In Your Twenties For 22 – 29 Year Olds
        • How To Start Investing In Your 30s For 30 – 39 Year Olds
        • How To Start Investing With $100 Or Less
        • How To Give Kids The Gift Of Stock
        • What Is Dividend Growth Investing
        • IRA Rollover Chart
      • Tools + Accounts

        • Best Online Stock Brokers
        • The Best Traditional And Roth IRA Accounts
        • The Best Robo-Advisors
        • The Best Investing Apps
        • The Best Places to Trade Options
        • The Best Places To Open A Health Savings Account
        • The Best Solo 401k Providers
        • The Best Self-Directed IRA Providers Of 2023
        • Best Cryptocurrency Exchanges
      • Reviews

        • Vanguard Review
        • Fidelity Review 2023
        • M1 Finance Review
        • TD Ameritrade Review 2023
        • Charles Schwab Review
        • Robinhood Review
        • Webull Review
        • Betterment Review 2023
        • Wealthfront Review
  • Earn More Money
      • Extra Income

        • 20 Best Side Hustles You Can Start Earning With In 2023
        • 54 Side Hustle Ideas To Make Money Fast In 2023
        • 100 Ways To Make Money In College In 2023
        • 80 Ways To Make Money From Home In 2023
        • 5 Quick Money Making Ideas (That Take Less Than 1 Hour)
        • 10 Interesting Ways You Can Make Money Driving
        • High-Paying Side Gigs That Earn $1,000 or More Per Month
        • The 10 Best Money-Making Apps
        • Paid Surveys: Earn Money For Giving Your Opinion Online
        • 10 Crazy Ways To Make $10,000 You’ve Never Heard Of
      • Build Wealth

        • 40 Best Passive Income Ideas To Build Wealth In 2023
        • 3 Ways To Make $50,000 Per Year Without Working With Passive Income
        • How To Become A Real Estate Investor With Just $500
        • 15 Best Online Business Ideas
        • Residual Income: 7 Super Smart Ways to Build It
        • The Most Common Multiple Income Streams
        • How To Become A Real Estate Mogul With Only $10,000
      • Reviews

        • Fundrise Review
        • RealtyMogul Review
        • FarmTogether Review
        • AcreTrader Review
        • Swagbucks Review
        • Survey Junkie Review
        • TopCashback Review
        • DoorDash Review
  • Personal Finance
      • Banking

        • 10 Best High Yield Savings Accounts Of March 2023
        • 10 Best Money Market Accounts Of March 2023
        • 10 Best Free Checking Accounts In March 2023
        • Best Bank CD Rates Of March 2023
        • 10 Best Business Checking Accounts In March 2023
        • Best Online Banks Of March 2023
        • Best Credit Unions Nationwide Of March 2023
        • Best College Student Checking Accounts Of March 2023
      • Insurance

        • Best Life Insurance Companies
        • Renters Insurance
        • Car Insurance
        • Pet Insurance
        • Umbrella Insurance
        • Disability Insurance
        • Tuition Insurance
        • Travel Insurance
      • Credit Tools

        • Best Budgeting Apps
        • Cash Advance Apps
        • How To Get A Free Credit Score Report
        • Best Credit Monitoring Services For 2023
        • Debt Settlement: Inside The Secret World
        • Credit Repair Explained: Should You Pay For Help?
        • Best Personal Loan Companies And Lenders
        • Online Loan Companies To Borrow From Home
      • Tax

        • Best Tax Software
        • Free Tax Software
        • IRS Tax Refund Calendar
        • Common IRS Questions and Errors
        • Federal Tax Brackets
        • Capital Gains Tax Brackets
        • 401k Contribution Limits
        • IRA Contribution Limits
        • HSA Contribution Limits
  • Awards
  • Search
Home » Student Loans » Federal » Student Loan ‘Fresh Start’ Program: Helping Borrowers Out Of Default

Student Loan ‘Fresh Start’ Program: Helping Borrowers Out Of Default

Updated: August 18, 2022 By Mark Kantrowitz

At The College Investor, we want to help you navigate your finances. To do this, many or all of the products featured here may be from our partners. This doesn’t influence our evaluations or reviews. Our opinions are our own. Any investing information provided on this page is for educational purposes only. The College Investor does not offer investment advisor or brokerage services, nor does it recommend buying or selling particular stocks, securities, or other investments. Learn more here.Advertiser Disclosure

There are thousands of financial products and services out there, and we believe in helping you understand which is best for you, how it works, and will it actually help you achieve your financial goals. We're proud of our content and guidance, and the information we provide is objective, independent, and free.

But we do have to make money to pay our team and keep this website running! Our partners compensate us. TheCollegeInvestor.com has an advertising relationship with some or all of the offers included on this page, which may impact how, where, and in what order products and services may appear. The College Investor does not include all companies or offers available in the marketplace. And our partners can never pay us to guarantee favorable reviews (or even pay for a review of their product to begin with).

For more information and a complete list of our advertising partners, please check out our full Advertising Disclosure. TheCollegeInvestor.com strives to keep its information accurate and up to date. The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products and services are presented without warranty.

fresh start student loan program

The "Fresh Start" program that was announced earlier this year promised to help borrowers that are in default on their student loans get a 'fresh start' once the student loan payment pause ended. This program didn't have many details at that point - but it promised to be one of the most beneficial aspects of Biden's student loan reforms.

On August 17, 2022, U.S. Department of Education told colleges that it is restoring financial aid eligibility to 7.5 million federal student loan borrowers under the Fresh Start program. This guidance provides more details about the Fresh Start program. 

Here's what you need to know about the Fresh Start program to get your student loans out of default.

Table of Contents
The Original 'Fresh Start' Announcement And Background
New 'Fresh Start' Announcement With Details
Timeline And Qualifications
How To Apply For Fresh Start
Letters To Colleges
Additional Guidance

The Original 'Fresh Start' Announcement And Background

The Fresh Start initiative was first mentioned in a U.S. Department of Education press release on April 6, 2022 about the sixth extension to the federal student loan payment pause and interest waiver. 

That press release said that all borrowers with paused loans would be eligible “to receive a “fresh start” on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing.” The press release did not, however, provide any further details.

Student loan default occurs after 270 days of non-payment and causes the borrower to lose eligibility for federal student aid.

A borrower can rehabilitate a defaulted loan by making 9 out of 10 consecutive, full, voluntary, reasonable and affordable payments, with aid eligibility being restored after six payments and the default being removed from your credit history after nine payments.

However, even with this option, over 7.5 million borrowers were in default at the beginning of the pandemic. 

New 'Fresh Start' Announcement With Details

The U.S. Department of Education has provided new details in a Dear Colleague Letter GEN-22-13 and a Fact Sheet.

The Fresh Start initiative provides the following benefits to borrowers with defaulted federal student loans. We highlighted some of the key aspects:

  • Their eligibility for Title IV federal student aid will be restored, once again making them eligible for the Federal Pell Grant, Federal Work-Study and federal student loan programs.
  • They will be able to enroll in an income-driven repayment plan or other repayment plans.
  • They will be eligible to rehabilitate a defaulted loan in the future if they rehabilitated the defaulted loan during the payment pause and interest waiver. 
  • The default will be removed from credit reports to credit reporting agencies and the loans will be reported as current.
  • Delinquencies will be deleted from credit report after seven years.
  • The default will be removed from the federal Credit Alert Verification Reporting System (CAIVRS), which affects their eligibility for other credit, such as mortgages. 
  • Involuntary collection efforts will be suspended. 

Timeline And Qualifications

Eligible loans include certain loans that were in default before the start of the payment pause and interest waiver on March 13, 2020. This includes defaulted loans in the William D. Ford Federal Direct Loan Program and defaulted loans in the Federal Family Education Loan (FFEL) program. These loans were held by or on behalf of the U.S. Department of Education.

Federal Perkins Loans held by a college or university are not eligible, but Federal Perkins Loans that are serviced by the U.S. Department of Education’s Debt Management and Collections System (DMCS) are eligible.

Defaulted HEAL program loans, loans that remain with the U.S. Department of Justice (DOJ) for litigation, and loans that enter default after the end of the payment pause and interest waiver are also not eligible.

Eligible Defaulted Loans

  • Direct Loans
  • FFEL Loans
  • Perkins Loans held by the U.S. Department of Education

Non-Eligible Defaulted Loans

  • Perkins Loans held directly by a college or university
  • HEAL Loans that remain with the DOJ
  • Private Loans

Note that if a borrower is ineligible for federal student aid for another reason, such as a failure to maintain Satisfactory Academic Progress (SAP) or owing a refund on an overpayment of a federal grant, they remain ineligible unless they cure these problems. 

If a borrower’s FFEL program loans entered default on or after March 13, 2020, the borrower regains eligibility for federal student aid as soon as the loans are assigned to the U.S. Department of Education. If the loans are not yet assigned to the U.S. Department of Education, the borrower regained eligibility for federal student aid as of March 12, 2021, the publication date of Dear Colleague Letter GEN-21-03. 

What Happens After You Get A Fresh Start?

Borrowers will have one year after the restart of repayment to start making payments on their previously defaulted loans. (A calculated payment of zero under an income-driven repayment plan will count as a payment.) 

If the borrowers have not made payment arrangements by the end of the one-year Fresh Start period, their loans will once again be in default and subject to collections and their renewed eligibility for federal student aid will end. 

The Fresh Start Program Is NOT Automatic. You Must Take Action!

How To Apply For Fresh Start

Borrowers can make payment arrangements by visiting myeddebt.ed.gov or by calling the Default Resolution Group at 1-800-621-3115. When the borrower makes payment arrangements, their loans will be transferred to a new loan servicer and the default status will be removed from their credit reports. 

If the student’s loans were in default before the start of the payment pause and interest waiver on March 13, 2020, the student must sign this acknowledgment before they regain aid eligibility:

“I, [full name], understand that I am eligible for Title IV aid as a result of the Fresh Start initiative. As a Fresh Start-eligible borrower, I understand that, by accepting Title IV HEA federal student aid during the Fresh Start period, I am agreeing to have my defaulted loans transferred to a new loan servicer – the company that will manage my loan - which will result in continued Title IV, HEA federal student aid eligibility beyond the Fresh Start period. I understand that this transfer may not occur immediately and that I can contact the holder(s) of my defaulted loan(s) to request transfer sooner.”

Defaulted parent borrowers who wish to borrow new Federal Direct PLUS loans must sign a similar acknowledgment.

Borrowers who defaulted on their FFEL program loans on or after March 13, 2020 are not required to sign the acknowledgment.

Additional information for borrowers will be made available at StudentAid.gov/FreshStart.

Letters To Colleges

College financial aid administrators have started receiving letters like the following in connection with the Fresh Start initiative.

To Whom It May Concern: 

The U.S. Department of Education (ED) has determined that the above-referenced individual will not be denied additional Title IV aid due to defaulted student aid debt owed to ED. 

The individual’s loans held by ED are covered by the Fresh Start initiative announced by ED on April 6, 2022. 

Their default status will not stop this individual from receiving aid until one year after the COVID-19 emergency relief (student loan payment pause) ends. Please check StudentAid.gov/coronavirus for more information about when the COVID-19 emergency relief is scheduled to end.

Please note: This reinstatement letter only covers debts held by ED. It does not cover any student loan debts that may be held by commercial lenders, guaranty agencies, or schools. If there are other loans in default held by these other lenders the above-referenced individual may still be unable to get additional Title IV aid. Should you have any questions, you may contact the Department's Default Resolution Group at 1-800-621-3115 (TTY 1-877-825-9923).  

Additional Guidance

A key goal of the Fresh Start initiative is to enable defaulted borrowers to finish their degrees. Borrowers who drop out of college are at higher risk of default. If the Fresh Start initiative helps defaulted borrowers to graduate, it will “increase the long-term repayment success” of these borrowers.

The U.S. Department of Education is encouraging colleges to eliminate other barriers to student success that prevent defaulted borrowers from re-enrolling, such as the withholding of official transcripts and diplomas due to debts owed to the college. 

The U.S. Department of Education also encourages colleges to make these borrowers aware of other federal programs that may be available to them, such as the Child Tax Credit, Supplemental Nutrition Assistance Program (SNAP), and the Affordable Connectivity Program. 

Mark Kantrowitz
Mark Kantrowitz

Mark Kantrowitz is an expert on student financial aid, scholarships, 529 plans, and student loans. He has been quoted in more than 10,000 newspaper and magazine articles about college admissions and financial aid. Mark has written for the New York Times, Wall Street Journal, Washington Post, Reuters, U.S. News & World Report, MarketWatch, Money Magazine, Forbes, Newsweek, and Time. You can find his work on Student Aid Policy here.

Mark is the author of five bestselling books about scholarships and financial aid and holds seven patents. Mark serves on the editorial board of the Journal of Student Financial Aid, the editorial advisory board of Bottom Line/Personal, and is a member of the board of trustees of the Center for Excellence in Education. He previously served as a member of the board of directors of the National Scholarship Providers Association. Mark has two Bachelor’s degrees in mathematics and philosophy from the Massachusetts Institute of Technology (MIT) and a Master’s degree in computer science from Carnegie Mellon University (CMU).

Editor: Robert Farrington

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, or other advertiser and have not been reviewed, approved or otherwise endorsed by any of these entities.
Comment Policy: We invite readers to respond with questions or comments. Comments may be held for moderation and are subject to approval. Comments are solely the opinions of their authors'. The responses in the comments below are not provided or commissioned by any advertiser. Responses have not been reviewed, approved or otherwise endorsed by any company. It is not anyone's responsibility to ensure all posts and/or questions are answered.
Subscribe
Connect with
I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree
Notify of

I allow to create an account
When you login first time using a Social Login button, we collect your account public profile information shared by Social Login provider, based on your privacy settings. We also get your email address to automatically create an account for you in our website. Once your account is created, you'll be logged-in to this account.
DisagreeAgree

0 Comments
Inline Feedbacks
View all comments

Primary Sidebar

Student Loan Resources

Featured Lender Reviews

>  Credible (recommended)
>  Splash (recommended)
>  ELFI
>  LendKey
>  Earnest
>  Laurel Road

Paying For College

  • Best Student Loans And Rates
  • Best Private Student Loans
  • Student Loan And Financial Aid Programs By State
  • Student Loans For Community College
  • Best International Student Loans
  • Best Student Loans For Graduate School
  • Best Student Loans For Your MBA
  • Best Student Loans For Medical School
  • Best No-Cosigner Private Student Loans
  • How To Get A Student Loan With Bad Credit

Navigating Repayment

  • How To Select The Best Student Loan Repayment Plan
  • 5 Legal Ways To Lower Your Student Loan Payment
  • How To Use A 529 Plan For Student Loan Repayment
  • These Companies Offer Student Loan Repayment Assistance

Student Loan Forgiveness

  • Student Loan Forgiveness Programs (The Complete List)
  • Student Loan Forgiveness Programs By State
  • President Biden’s Student Loan Forgiveness Plan
  • Public Service Loan Forgiveness
  • Borrower Defense To Repayment
  • For-Profit College Student Loan Forgiveness List
  • Private Student Loan Forgiveness
  • Trade School Loan Forgiveness Programs

Student Loan Refinance

  • Best Student Loan Refinance Companies
  • Best Student Loan Refinancing Bonuses And Promotional Offers
  • Lenders That Offer Student Loan Refinancing Without A Degree
  • How To Refinance An International Student Loan
  • Best Medical School Student Loan Refinancing

More On Student Loans

  • Top Student Loan Scams
  • Does The Government Profit Off Of Student Loans?
  • Statue Of Limitations Laws For Student Loans
  • What Should You Do With Your Old FFELP Loans?
  • How To Get A Refund Of Your Federal Student Loan Payments

Footer

Who We Are

The College Investor is an independent, advertising-supported financial media publisher, focusing on news, product reviews, and comparisons.

Connect

  • Contact Us
  • Advertise
  • Press & Media

About

  • About
  • Our Team
  • Podcast
  • Editorial Guidelines
  • How We Make Money
  • Archives

Social

Copyright © 2023 · The College Investor · Privacy Policy ·Terms of Service · DO NOT Sell My Personal Information

wpDiscuz