On April 26, 2022, the Department of Education announced Fresh Start, a temporary program to help borrowers who have student loans in default. Fresh Start will run until the end of September 2024.
Fresh Start Program Benefits:
- borrowers who have eligible loans in default can get their loans out of default quickly and easily;
- restores access to financial aid for borrowers in default who want to go back to school;
- collections will continue to be paused during the Fresh Start period for borrowers with eligible loans, giving borrowers time to take advantage of the Fresh Start program before returning to repayment;
- Fresh Start also restores access to income-driven repayment (IDR) plans, loan forgiveness programs, and deferments and forbearances.
The Department is still working on implementing Fresh Start, and it plans to reach out to borrowers with more information about the program.
Are My Loans Eligible for Fresh Start?
Most defaulted federal student loans are eligible for Fresh Start benefits.
Loans That are Eligible for Fresh Start:
- Direct Loans,
- Perkins loans held by the Department of Education, and
- most Federal Family Education Loan (FFEL) loans (held by the Department of Education and commercial lenders) that defaulted before the pandemic.
Loans That are Not Eligible for Fresh Start:
- Health Education Assistance Loan (HEAL) loans,
- defaulted Perkins loans held by schools,
- loans placed with the U.S. Department of Justice for ongoing litigation,
- loans that go into default after the payment pause ends in September 2023, and
- FFEL loans that defaulted during the pandemic (these loans will be taken out of default automatically as a result of the expansion of COVID-19 relief, but these loans aren’t eligible for Fresh Start.)
If you have federal student loans in default, you likely will be eligible for Fresh Start. If you are not sure if you have eligible loans, you can contact the Default Resolution Group if your loans are held by the Department of Education, or your Guarantee Agency if your loans are held by a commercial lender.
Don’t know who holds your loans? See our page on loan holders to find out if your loans are held by the Department of Education or a commercial lender.
Do I Have to Ask for Fresh Start or Will It Be Automatic?
Some Fresh Start benefits are automatic, such as the additional pause on collections and temporary restoration of eligibility for financial aid.
To get your loans out of default using Fresh Start, you have to contact your loan holder and ask for Fresh Start before the end of September 2024. Your loans will then be removed from default and transferred to a new loan servicer. If you do not sign up for the Fresh Start program before the end of September 2024, then your loans will remain in default and you may once again face collection on your loans, such as wage garnishments, tax refund offsets, and Social Security offsets.
Additionally, if you want to sign up for an income-driven repayment plan (IDR), ask your loan holder when you contact them about Fresh Start. You will have to provide some information about your income and family size. In an IDR plan could offer monthly payments as low as $0.
How Do I Sign Up for Fresh Start to Get My Loans Out of Default?
Signing up for Fresh Start is easy. If your loans are held by the Department of Education, you can contact the Default Resolution Group to ask for a Fresh Start. If your loans are held by a commercial lender, you should call your Guaranty Agency to sign up for Fresh Start. The Guaranty Agency will transfer your loans to the Default Resolution Group to get your loans out of default and transfer you to a new loan servicer.
If you don’t know who your loan holder is, that’s okay! You can call the Default Resolution Group at 1-800-621-3115 if you are unsure or do not know which Guaranty Agency holds your loans. The Default Resolution Group will tell you who your loan holder is and what steps you need to take to sign up for Fresh Start.
Three Ways to Ask for a Fresh Start For Loans Held by the Department of Education
This process can take less than 10 minutes.
Go to myeddebt.ed.gov and log in to your account. You can create an account if you don’t already have one.
Call the Default Resolution Group at 1-800-621-3115. If you are deaf or hard of hearing, the TTY number is 1-877-825-9923. You can also call this number if they do not know whether your loan is held by the Default Resolution Group or a Guaranty Agency.
Send a letter to P.O. Box 5609, Greenville, TX 75403. In your letter, include your name, social security number, date of birth, and the following: “I would like to use Fresh Start to get out of default and bring my loans back into good standing.”
What Should I Say When I Contact the Default Resolution Group or My Guaranty Agency?
When you call the Default Resolution Group or your Guaranty Agency, tell the Customer Service Representative that you want to sign up for Fresh Start to get out of default. The Default Resolution Group or Guaranty Agency will then begin the process of transferring your account to a new loan servicer. The process to sign up for Fresh Start over the phone should only take about 10 minutes.
How Do I Enroll in an Income-Driven Repayment (IDR) Plan?
When you contact the Default Resolution Group or your Guaranty Agency to ask to get your loans out of default using Fresh Start, you should also let the customer service representative know if you are interested in an income-driven repayment (IDR) plan. The customer service representative will then ask a series of four to five questions about your income and family size. Before calling, it may be helpful to look up your income on your most recent federal tax return (line 11 of IRS Form 1040). But if you can’t find it or didn’t file taxes, don’t worry—you can still sign up for an IDR plan.
The customer service representative should be able to tell you over the phone what your monthly payment will be under an IDR plan. They will then pass on this information to your new loan servicer during the transfer process. Under an IDR plan, your payments could be as low as $0 per month.
Once your loan is transferred to your new loan servicer, your new loan servicer will then use the information you gave to sign you up for IDR. They will send you a notice and let you know when your payments will be due. It may take 30-45 days after you first ask for Fresh Start to have your loans transferred to your new loan servicer.
When Will I Get Notice That My Loans Have Been Removed From Default?
After you first ask to get out of default using Fresh Start, the customer service representative for the Default Resolution Group or your Guaranty Agency will then begin the process to remove the loan from default and transfer it to a new loan servicer. The entire process should take between 30-45 days. You should contact the Default Resolution Group or your Guaranty Agency for a status update if you do not get notification within 45 days.
How Will Fresh Start Impact My Future Options to Get Out of Default? Will It Count Against My One-Time Rehabilitation?
Fresh Start will not impact your options to get out of default again if you default in the future. It will not count towards the one-time limit on rehabilitating loans out of default. This means that if you use Fresh Start to get out of default, and then end up defaulting again, you will still have the ability to get out of default using loan rehabilitation if you have not already done so before the pandemic. For more information, see our page on other options for getting out of default.
Will Fresh Start Affect My Applications for Other Relief?
No, Fresh Start won’t affect your applications for other relief, such as loan forgiveness, cancellation, or discharges. If you use Fresh Start to get out of default, the Department of Education will process most types of forgiveness and discharge applications before transferring your loan to your new non-default servicer. If you have a borrower defense application, that information will be shared with your new servicer.
I Have a Defaulted Spousal Consolidation Loan. Do I Need My Spouse to Sign Off on the Fresh Start Request?
No. Fresh Start will only require one party on the loan to opt in, your spouse does not need to call.
My Defaulted Loan is with the U.S. Department of Justice (DOJ). How Can I Find Out If I Can Access the Fresh Start program?
You should first contact the Default Resolution Group. The Default Resolution Group may already have information that your account has been deemed to be eligible for Fresh Start. If the Default Resolution Group tells you that your account is not eligible, you can contact the FSA Ombudsman Group about your options for getting out of default.
Is Fresh Start Available to Incarcerated Borrowers?
Yes, Fresh Start is available to incarcerated borrowers. The Department of Education is in the process of rolling out an additional telephone number that incarcerated borrowers can use to contact the Default Resolution Group or their Guaranty Agency to get their loan out of default. Additionally, incarcerated borrowers can also send a letter asking for a Fresh Start. If you ask for a Fresh Start by mail, you should let the Department of Education know that you are incarcerated. For more information on other relief available for incarcerated borrowers, see our page on student loans and incarceration.