THE FRESH START PROGRRAM HAS ENDED
Using Fresh Start to Get Out of Default
Fresh Start was a temporary U.S. Department of Education (ED) program offering special benefits for borrowers with defaulted federal student loans. It ended at 3AM ET on Oct. 2, 2024.
Although Fresh Start has ended, you still have options to get out of default: Rehabilitation and consolidation can get your student loans out of default, stop collections, and restore access to income driven repayment plans and debt relief options. Learn more.
Fresh Start allowed borrowers to get out of default more easily than the standard methods, repair credit, halted collections, and gave access to affordable repayment plans and debt relief programs.
Immediate Benefits of Fresh Start – In Detail
- Access to Federal Student Aid: Apply for grants and loans to complete your education.
- Stopped Collections: Tax refunds, wages, and Social Security benefits will not be withheld, and collection calls will cease.
- Credit Repair: Default and delinquency history will be removed from credit reports.
- Eligibility for Other Government Loans: Default status is removed from the government credit reporting system, increasing eligibility for loans like mortgages.
- Restored Ability to Rehabilitate Loans: Fresh Start does not count as your one chance to rehabilitate loans.
- Credit Reporting Changes: Since December 2022, defaulted ED-held loans are reported as “current” to credit agencies.
- Extra Forgiveness Credit: Borrowers using Fresh Start or who consolidate during the Fresh Start period (through September 30, 2024) will get the full benefit of the IDR Account Adjustment, a one-time account revision that brings you closer to eliminating your debt, including credit towards forgiveness for the period spent in default during the payment pause.
Additional Benefits After Enrollment – In Detail
Gain Access to:
- Income Driven Repayment (IDR) Plans: Monthly payments can be as low as $0 based on income.
- Loan Forgiveness Programs: Regain eligibility for programs like Income Driven Repayment Forgiveness and Public Service Loan Forgiveness (PSLF).
- Short-term Relief: Access to forbearance and deferment options.
How to Enroll in Fresh Start:
To get out of default and claim full benefits, you must have eligible loans, and you must enroll by October 1, 2024. For ED-held loans, use one of the methods below; for loans with a guaranty agency, contact that agency. Find contact information for guaranty agencies here.
Borrowers wishing to continue their education can also complete the Federal Application for Financial Aid (FAFSA) and enroll in school at least half-time.
Unsure of your loan servicer? Visit your studentaid.gov account dashboard and scroll down to the “My Loan Servicers” section or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.
Enrollment Methods for ED-held loans:
- Online: Log in at myeddebt.ed.gov.
- Phone: Call 1-800-621-3115 (TTY 1-877-825-9923).
- Mail: Write to P.O. Box 5609, Greenville, TX 75403, including your name, SSN, DOB, address, and a statement requesting Fresh Start.
What Happens After Enrolling
- Loans are transferred to a non-default servicer.
- Loans are returned to a status of “in repayment” or “school deferment” if you’re planning to continue your education.
- Default history is removed from your credit report.
- Your new loan servicer will contact you, and you can apply for an income-driven repayment (IDR) plan.
Enroll In an Income Driven Repayment Plan
Initially, you’ll be on the Standard Repayment Plan, but for most borrowers, we recommend an IDR plan, which customizes payments based on income. You can apply for an IDR plan through studentaid.gov once your Fresh Start enrollment is processed. Refer to our Repayment Strategies & Plans page to explore your options or use our self-guided tool to determine your strategy.
Note: Borrowers who are continuing their education and are placed in a school deferment don’t have to enroll in a repayment plan until they graduate, drop below half-time status or withdraw from school.
ALERT: Please be advised that the SAVE plan is temporarily blocked by a court order and the only way to enroll in any IDR plan is through a paper application at this time. Learn more.
Which Loans are Eligible for Fresh Start?
Eligible Loans
- Defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans that defaulted prior to the COVID-19 payment pause (March 13, 2020)
- Defaulted Perkins Loans held by ED
Ineligible Loans
- Defaulted Perkins Loans held by schools
- Defaulted Health Education Assistance Loan Program loans
- Defaulted Student loans with ongoing litigation by the U.S. Department of Justice
- Direct and FFEL Program loans that default after the COVID-19 payment pause
For eligibility questions, call the Default Resolution Group at 1-800-621-3115 (TTY 1-877-825-9923).
What’s next?
Enroll in Fresh Start, determine your debt tackling strategy, enroll in the right repayment plan for your situation and strategy, and start making on-time monthly payments.
Explore our resources below to help you get on the right track!
Want Personalized Assistance?
If you live in New York State, contact EDCAP for a free, unbiased counseling session with one of our student loan experts. We can help you explore relief options and come up with a comprehensive, tailormade plan to help you tackle your student debt.
Attend a webinar for more in-depth guidance and a live Q&A to get answers to all your questions in real-time from student loan experts.
