Last year, the U.S. Department of Education released a plan to help nearly 8 million Americans in default the opportunity to re-enter repayment in good standing through the Fresh Start initiative.
This program aims to help borrowers avoid the hassle of traditional loan rehabilitation or consolidation.
One of the major benefits of the Fresh Start initiative for borrowers is the ability to have their loans returned to “current” status on their credit reports and remove negative default marks.
Also, borrowers will regain access to federal student aid and other government loans, such as mortgages, and have access to flexible repayment plans like income-driven repayment and short-term relief options like deferment or forbearance.
Furthermore, collection efforts on defaulted loans — income tax refund offset, wage garnishment, etc. — will be suspended under the initiative, even after the current student loan payment pause ends.
Borrowers will also regain eligibility for financial aid and loan forgiveness programs such as Public Service Loan Forgiveness and income-based repayment forgiveness.