“Fresh Start” Initiative Puts Defaulted Borrowers in Good Standing

This post is dedicated to an initiative that was recently launched for student loan borrowers who have fallen into default, as it’s not getting as much attention as it should.

Today, roughly 3 million people are in default on their federal student loans. It’s likely that you or some of your peers, graduates and staff are affected, but it’s not exactly a topic that is voluntarily discussed…

Benefits of Fresh Start

ALL borrowers who are currently in default automatically get the benefits of Fresh Start temporarily… but you MUST apply to keep them long-term. The core benefits are:

• Loans to be Transferred from the Default Resolution Group to a Federal Servicer.
• “In Repayment” Status & Default Standing Removed from your Credit Report.
• Regain Access to Federal Student Aid
• Stopped Collections
• Restored Ability to Rehabilitate Loans
• Access to Income-Driven Repayment (IDR) plans and Federal Forgiveness Programs (like PSLF).

Yep, it’s not hard to see that “Fresh Start” is a no-brainer for those in default…

But What if I Can’t Afford Repayment?

Yes, with Fresh Start you must begin repaying your loans after the CARES Act payment halt ends (this summer expected). However, the prospect of repayment today is not as overwhelming as it may have been in past years. The Income-Driven Repayment (IDR) plans can be extremely affordable as they have evolved in recent years. You don’t even start paying a portion of your income until your earnings eclipse $20k. Some statistics for perspective:

• HALF of Fresh Start participants will have a $0 payment and remain in good standing.
• 60% will pay less than $50/month.

Which Loans are Eligible for Fresh Start?

• Defaulted Federal Direct Loan Program Loans (aka “Direct”)
• Defaulted Federal Family Education Loan (FFEL) program loans
• Defaulted Perkins Loans if they are held by ED

These loan types do NOT qualify:

• Direct and FFEL loans that default after the COVID-19 payment pause ends
• Defaulted Perkins loans held by schools
• Defaulted Health Education Assistance Loan Program loans
• Student loans remaining with the U.S. Department of Justice for ongoing litigation

How to Apply

To access Fresh Start, visit https://myeddebt.ed.gov/, where the process can take 10 minutes or less. Other options, including phone and “snail mail” information, are available on Federal Student Aid’s dedicated page.

How Do I Choose a Repayment Plan?

Once you enroll in Fresh Start, you’ll be prompted to enroll in a repayment plan. If you’re pursuing PSLF, or otherwise seeking the most affordable payment option, you should consider enrolling in an IDR plan. The student loan simulator at FSA can help you explore payment options, or you can register for a 1-1 consultation from our Advisory team to determine your optimal path to savings.

*Please note that Doctors Without Quarters is an Advisor and advocate; we work with borrowers on loan repayment strategy to maximize savings and take advantage of any available forgiveness. We can’t access Federal Student Aid or work with servicers on your behalf; but we can walk you through all steps in our 1-1 consultations.

That said, all the information you need to get back in good standing is right here in this post.

If your or someone in your network is in default, we hope you’ll heed or share this message so that all eligible borrowers take advantage of Fresh Start before the opportunity goes away.

‘til DEBT do us part,

Brandon Barfield

Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.