The "Student Loan Fresh Start" program was introduced in April 2022 as a temporary initiative to help over 7.5 million borrowers who have defaulted on their federal student loans.
The program allows borrowers to get their defaulted loans back into good standing, removing negative marks from their credit reports.
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Eligibility is limited to federal direct loans, FFELP loans, and government-held Perkins loans - private student loans do not qualify.
To take advantage, borrowers must act quickly as the deadline to enroll is September 30, 2024.
Once enrolled, the defaulted loans are transferred to a non-default servicer, which removes the default status from the borrower's credit report.
This restoration of good standing also reinstates the borrower's eligibility for federal student aid like grants and loans.
The Fresh Start program is a key step towards loan forgiveness under income-driven repayment (IDR) plans or the Public Service Loan Forgiveness (PSLF) program.
Borrowers who complete the Fresh Start program may see improved credit scores as the negative default marks are removed.
Despite the name, the Fresh Start program does not actually "forgive" any portion of the defaulted student loans - it just brings them back into good standing.
An estimated 75 million borrowers with previously defaulted federal student loans are eligible for the Fresh Start program.
The program is only temporary, running for one year after the end of the COVID-19 payment pause, which is currently set to expire in June 2023.
Borrowers who don't act by the September 2024 deadline will miss out on the Fresh Start program's benefits and remain in default.
The Fresh Start program is part of the Biden administration's broader efforts to address the student debt crisis and make repayment more manageable.
Unlike permanent loan forgiveness, the Fresh Start program simply restores borrowers to good standing - the loans themselves are not reduced or eliminated.
Borrowers can check their eligibility and enroll in the Fresh Start program through their student loan servicer or the Federal Student Aid website.
The program is designed to increase long-term repayment success by providing a path out of default for millions of struggling borrowers.
Defaulted borrowers who don't enroll in Fresh Start by the deadline may face continued collection efforts and negative credit reporting.
The Fresh Start program does not apply to commercially-held FFEL loans, which make up a significant portion of outstanding federal student debt.
Experts suggest the Fresh Start program could be a crucial steppingstone for borrowers seeking eventual loan forgiveness through other federal programs.