Taking Advantage of the Default Fresh Start

Update as of October 2024: The Default Fresh Start program has ended, but federal student loan borrowers can still use options like loan consolidation or loan rehabilitation to get back into good standing. If you're a Summer member, contact our team at hello@meetsummer.com for guidance on the next steps.

In April 2022, the Department of Education announced the Fresh Start program for federal student loans in default: a limited-time opportunity for borrowers in default to get their loans back into good standing before payments resume. As of August 2023, we have some additional details of how this program will work and its benefits to borrowers. Let’s dive into the details!

Why should you get out of default?

There couldn’t be a better time to get out of default. Many borrowers in default will receive partial or complete forgiveness, and their remaining balances will continue to have payments, interest, and collections and garnishments paused through the end of August 2023. They also now have the opportunity to get their loans back into good standing before payments resume in October.

There are so many benefits to getting out of default — credit scores will improve (and access to additional loans for cars and mortgages, for example), you’ll be able to access additional federal aid, you can make lower monthly payments based on your income, and you’ll also once again be eligible for other federal forgiveness programs like Public Service Loan Forgiveness (PSLF) and income-driven repayment (IDR).

What you need to do

The Fresh Start benefits will impactful but not automatic — you’ll need to take action to access them. The Department of Education says that the next steps will take less than 10 minutes. There are three ways to make this happen:

1. Log in online to https://myeddebt.ed.gov/
2. Call the Default Resolution Group at 1-800-621-3115 (or 1-877-825-9923 if you're deaf or hard of hearing.)
3. Mail a letter to P.O. Box 5609, Greenville, TX 75403. From the Department of Education: "in your letter, include your name, social security number, date of birth, and the following: 'I would like to use Fresh Start to bring my loans back into good standing.'"

There are also a few important things to know for when you make contact:

• However you decide to make contact, tell the person who speak to that you want to enroll in Fresh Start and an income-driven repayment (IDR) plan - this should lower your monthly payments to make them more affordable, in addition to other benefits.
• If you can, have your last federal tax return (IRS Form 1040) ready to see your official income and adjusted gross income (AGI) on line 11. Even if you don't have this handy, you can still call and enroll!

You should not have to consolidate or rehabilitate to access the program, but it is a limited time opportunity. It will end one year after payments resume, putting the expiration at the end of 2024. But the best time to get set up is before payments are due again in October 2023.

What else is new about fresh start?

Here’s what we know about how this will work: once you request the Fresh Start program, your loans will transfer from the Default Resolution Group or collections to a loan servicer within 4-6 weeks. Your loan will then return to “in repayment” status, the default will be removed from your credit report.

There are a few groups who won’t qualify for these benefits, including people who go into default after the payment pause ends, and Perkins loans that are held by individual schools. If you fall into one of those groups, contact Summer's team at hello@meetsummer.org for help on next steps. Borrowers with FFEL loans who defaulted during the payment pause should also have their loans automatically returned to good standing without taking action.