The Biden administration has briefly extended a deadline for a key federal student loan relief program. The move gives borrowers an additional day to take advantage of a one-time opportunity.
Under the Fresh Start program, borrowers in default on their federal student loans have been shielded from collections activities for the last year. This includes negative credit reporting, wage garnishment, and offset of federal benefits, including Social Security. And by enrolling in Fresh Start, borrowers can get out of default and restore their loans to good standing, allowing them to take advantage of federal student loan forgiveness and repayment programs.
But Fresh Start is a one-time program and was set to end on Monday, September 30. The Education Department has now extended the deadline to 3am Eastern Time on Wednesday, October 2.
“Extended deadline!” announced Under Secretary of Education James Kvaal in a statement on X on Monday. “Until tomorrow, borrowers with defaulted loans have one more chance to get back into good standing.”
Here’s what borrowers need to know
Fresh Start Can Resolve Default And Allow Borrowers To Get Student Loan Forgiveness Credit
The Fresh Start program is a temporary Biden administration initiative that primarily does two things.
First, it has extended many of the protections associated with the Covid-19 forbearance that shielded borrowers from adverse consequences associated with being in default on their federal student loans. This includes negative credit reporting, administrative wage garnishment (which does not require litigation or a court order), seizure of federal tax refunds, and the offset of Social Security and other federal benefits and income streams.
Second, Fresh Start provides borrowers with an avenue for getting their federal student loans out of default and back into good standing again. By doing so, borrowers can restore access to federal student aid, take advantage of affordable repayment programs including income-driven repayment, and potentially get on track for eventual student loan forgiveness.
According to the Education Department, borrowers who enroll in Fresh Start by the deadline can also receive credit toward IDR student loan forgiveness (which typically can happen after 20 or 25 years in repayment under an IDR plan) from March 2020 through the date they are brought out of default. That’s potentially more than 4.5 years of IDR student loan forgiveness credit.
Fresh Start Deadline Extended After Website Issues
Fresh Start is a one-time initiative and was scheduled to end on September 30, coinciding with the end of a parallel program referred to as the “on-ramp.” But many borrowers had difficulty enrolling in Fresh Start at the last minute because the Education Department’s web portal was down or slow, preventing them from being able to enroll.
To mitigate these issues, the department has now extended the Fresh Start deadline to 3am Eastern Time on Wednesday, October 2. This gives borrowers a bit more time to sign up before the program ends.
Advocates have been pushing the Biden administration to extend the protections associated with Fresh Start for far longer. But so far, the department appears to be allowing only a very modest extension.
How To Sign Up For Fresh Start
According to the Education Department, there are several ways to enroll in Fresh Start.
Borrowers who have defaulted federal student loans held by the department can enroll over the phone, online, or by mail.
“Go to myeddebt.ed.gov and log in to your account,” says the Education Department in published guidance. “This is the easiest option if you know your login.” Alternatively, borrowers can call the department’s Default Resolution Group at 1-800-621-3115. “A representative will ask for some information to find your record, then ask why you are calling (your answer: Fresh Start, to get out of default),” says the department. “You will also get an opportunity to indicate interest in an income-driven repayment plan, which likely will qualify you for a lower monthly payment than a standard plan.” Borrowers can also apply by mail, although the request must be postmarked by the deadline.
“It can take as little as 10 minutes,” said Kvaal in his statement on Monday. However, some borrowers were reporting long call hold times to the Default Resolution Group last week.
Not all federal student loans are held by the Education Department, however. Some FFEL-program loans that are in default are held by a guaranty agency. “If your loans are held by a guaranty agency, you’ll need to call that agency,” to enroll in Fresh Start, says the department.