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Fresh Start

On April 6, 2022, the Department of Education (ED) announced that borrowers who have defaulted on their federal student loans will have a one-time opportunity to restore their loans to good standing through a “Fresh Start” initiative. Traditionally, defaulted borrowers can only restore their loans to good standing through the rehabilitation or consolidation processes. Defaulting on federal student loans comes with a host of negative consequences for borrowers including possible wage garnishment, seizure of federal benefits and tax refunds, and the loss of eligibility for federal financial aid programs. 

Fresh Start offers several benefits to defaulted borrowers, including: 

  • Protection from involuntary collections;

  • Removal of default loan status from credit reports; 

  • Restored eligibility to receive federal financial aid like federal Pell Grants and future student loans; and,

  • Restored eligibility for loan rehabilitation for borrowers who rehabilitated their defaulted loans during the payment pause

Under Fresh Start, borrowers may exit default by contacting the Default Resolution Group or guaranty agency to enroll in an Income-Driven Repayment (IDR) plan. Defaulted borrowers who apply for federal financial aid to further their higher education before the expiration of Fresh Start will automatically be brought out of default and into in-school deferment status for the duration of their enrollment, but must enter IDR or other repayment to stay out of default upon returning to repayment status. 


Fresh Start is a temporary program. Defaulted borrowers must take one of the following actions within one year of the COVID-19 payment pause ending to receive the benefits of the initiative:

  1. Contact the Default Resolution Group (DRG) or a guaranty agency to request a repayment plan; OR

  2. Request Title IV funding at an eligible institution.

If borrowers do not take one of these steps to get their loans out of default within a year after the payment pause ends, their loans will be placed back into default using the original date of delinquency. ED will automatically restore to good standing borrowers who defaulted on commercially-held FFEL loans after March 13, 2020, but these borrowers will still need to take steps if they want to get into IDR. 


Only borrowers owing defaulted loans under one of the following federal programs are eligible for Fresh Start: 


  • William D. Ford Federal Direct Loan (Direct Loan) Program;

  • Federal Family Education Loan (FFEL) Program loans (both ED-held and commercial held); and/or,

  • Defaulted ED-held Perkins Loans.

If you have more questions, visit the National Consumer Law Center’s Fresh Start FAQ page.

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