Student Loan Forgiveness: Today's the Last Day to Apply for This Student Loan Debt Relief Program
The Fresh Start program is a one-time offering from the Department of Education that lets you move your student loans out of default status, while offering many other benefits. But there's a deadline: You have to apply by the end of the day today, Sept. 30, 2024. Here's how it works.
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What is the Fresh Start Program?
The Fresh Start program is a temporary, one-off program from the Department of Education that can help you get your student loans out of default. Your loans are considered in default status if you missed more than 270 days of payments on them. Fresh Start has an simple sign-up process and can return your loans to active repayment status within four to six weeks.
Normally, borrowers have two options for getting loans out of default: student loan consolidation and rehabilitation, both of which can take several months. Fresh Start is temporarily replacing rehabilitation - and its offers several additional benefits.
"The Fresh Start Initiative is the best opportunity for getting student loans out of default," said financial aid expert and CNET Money Expert Reviewer Mark Kantrowitz.
Current benefits for borrowers with defaulted federal student loans
Between now and the end of September, all borrowers automatically get the following perks:
After you apply for Fresh Start, you'll also get these additional benefits:
Your loans will automatically go onto the standard 10-year repayment plan after they come out of default. But you can request an income-driven plan on the Federal Student Aid website.
Can Fresh Start help me get student loan forgiveness?
Yes. A major benefit of Fresh Start is that it restores your access to student loan forgiveness programs, such as Public Service Loan Forgiveness and Teacher Loan Forgiveness. Each program has its own specific eligibility requirements, such as working in public service for a certain number of years and paying your loans back on a qualifying repayment plan.
You can also qualify to have your remaining balance forgiven if you qualify for an income-driven repayment plan. The SAVE plan, for example, will offer loan forgiveness after 10 to 25 years, depending on your original loan balance and type of loan. The other IDR plans will forgive any remaining balance after 20 or 25 years of payments. (Note: Forgiveness through SAVE is currently on hold , pending final resolution from federal courts.)
There's more good news for borrowers who use Fresh Start - their payment counts won't restart at zero, so you may be well on their way to receiving forgiveness through a program or IDR plan.
"[Borrowers] will receive credit for months in default ... from March 2020 to the date they were no longer in default due to the Fresh Start initiative," Kantrowitz said. "They also get credit for qualifying payments made prior to going into default."
Even if you don't qualify for forgiveness programs, enrolling in an IDR can help lower your monthly student loan bill. According to the Department of Education, 80% of Fresh Start borrowers move to an income-driven repayment plan. About half of Fresh Start borrowers qualify for $0 monthly payments on an IDR plan, while 60% pay less than $50 per month toward their student loans.
How can I tell if my loans are in default?
Since student loan payments were paused for over three years, you might not be sure if your loans are in default. There are a few ways you can check on the status of your loans:
Do all loans qualify for the Fresh Start Program?
Any federal student loan borrower can qualify for Fresh Start, but not all loan types are eligible. These loans are all eligible for Fresh Start:
However, the following types of loans aren't eligible for Fresh Start:
If you have a federal student loan that doesn't qualify for the Fresh Start program, you can choose loan consolidation to replace your non-eligible loans with a new Direct Loan. This will get your loans out of default if you agree to get on an income-driven repayment plan.
You should consolidate quickly, though - while you can technically consolidate at any time, right now, you'll be able to maximize your forgiveness options if you consolidate before the end of June.
Note: Consolidating your loans will move them out of default status, but it will not remove the record of default from your credit report.
How to sign up for the Fresh Start program
There are three ways you can sign up for Fresh Start:
- Online: You can sign up for Fresh Start online by logging into your account at myeddebt.ed.gov . This is likely the easiest option if you know your login.
- Over the phone: Call the Department of Education's Default Resolution Group at 1-800-621-3115 (the TTY number is 1-877-825-9923). This call will take about 10 minutes.
- By mail: Send a letter to P.O. Box 5609, Greenville, TX 75403. Along with your request to enroll in Fresh Start, write down your name, mailing address, date of birth and Social Security number. Your letter has to be postmarked before Oct. 1, 2024.
What happens if I miss the Fresh Start deadline?
If you miss the deadline to sign up for Fresh Start, you can still consolidate federal loans to get them out of default. But your payment count may restart at zero, which means you'll need to make payments for another 10 to 25 years if you're working toward forgiveness.
Your other option, loan rehabilitation, will remove the default from your credit report, but it takes a lot longer. You'll have to make nine full payments over the course of 10 months to get your loans out of default. You can use rehabilitation only once (though having previously used Fresh Start won't count against this one-time chance). You can learn more about loan rehabilitation at StudentAid.gov .