Student Loan Fresh Start: What to Expect in Terms of Duration

Since the start of federal student loan payments again in October 2023, the Fresh Start program has been in place in an attempt to help borrowers who fell behind on their payments prior to the a pandemic

Exclusively available to those with federal student loans, this program targets borrowers who defaulted before the forbearance period that commenced on March 13, 2020. 

It’s important to note that certain loan types, such as private student loans and school-held Perkins Loans, are not eligible for the Fresh Star initiative.

The program, designed as a second chance for those who have rehabilitated and defaulted in the past, offers an alternative path out of default, even for those who have previously used rehabilitation or consolidation.

Enrollment in the Fresh Start program brings a range of benefits, including the restoration of loans to “current” status on credit reports, removal of negative default marks, access to federal student aid and government loans, and the flexibility of repayment plans, including income-driven repayment.

Distinguished by its practicality, the Fresh Start program stands out as it does not require a lump sum payment or loan consolidation.

What happens when someone signs up for the Fresh Start program?

After the temporary payment freeze ends, qualified borrowers with delinquent student loans have one year to get their loans back into good standing under the US Department of Education’s Fresh Start program.

Important things to be aware of:

Renewed Access to Benefits: Your loans will be reported as current, granting access to student loan forgiveness and repayment programs like income-driven repayment. Short-term relief, such as deferment or forbearance, also becomes available.

Updates to Credit Reports: The default record will be removed from credit reports, offering a clean slate. Importantly, Fresh Start doesn’t count as a rehabilitation, potentially allowing for a second chance if you default again.

Collections Relief: Collection efforts will cease, even after the student loan payment pause ends. Wage garnishment, tax refunds, and Social Security checks won’t be affected for one year following the pandemic pause.

After the payment pause concludes, monthly student loan payments resume.

The Fresh Start program necessitates most borrowers to establish long-term payment arrangements, ensuring a structured approach to debt repayment.

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Maximizing Fresh Start Benefits

Since the start of federal student loan payments again in October 2023, the Fresh Start program has been in place in an attempt to help borrowers who fell behind on their payments prior to the a pandemic

What Can You Do?

To maximize the benefits of the Fresh Start program, consider these steps:

Update Your Contact Info: Ensure your loan servicer and profiles are accurate for essential updates.

Explore Repayment Options: Fresh Start participants gain access to income-driven repayment plans, with the potential for Public Service Loan Forgiveness. Utilize the department’s loan simulator to determine the best option for your needs.

Seek Short-Term Help: If needed, lower payments or request a temporary pause through deferment or forbearance. Contact your loan servicer for assistance.

Consult a Financial Advisor: Feeling overwhelmed? A financial advisor can help review your options and create a plan to manage your loans effectively.

As the initiative unfolds, defaulted student loans will be reported as “current” on credit reports, and the negative marks will be removed. The program also grants access to repayment options and forgiveness, reinstating the potential for income-driven repayment plans and Public Service Loan Forgiveness.

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