Federal Student Aid Eligibility for Borrowers with Defaulted Loans
On April 6, 2022, the U.S. Department of Education (ED) announced an initiative—called “Fresh Start”—to help eligible borrowers in default.
Fresh Start will continue through one year after the COVID-19 payment pause ends.
If your loans are eligible, you’ll temporarily regain several student aid benefits. You’ll also get the opportunity to get out of default and keep those benefits for the long term.
Some of the Fresh Start benefits are available right now, but some other benefits won’t be available until later this year.
ED eliminated default status to Federal student loan borrowers on past due balances. The new “Fresh Start” initiative implemented steps for borrowers to reinstate them out of default status by providing low repayment plans, restore Pell Grant and Campus-based program eligibility to allow borrowers to complete their program of study and remove students from the federal Credit Alert Verification System (CAIVRS).
Students defaulted BEFORE or on March 13, 2020 will have to complete the "Fresh Start" acknolwedgement (webform) through the Student Verification on PASPort.
For further information, please click here.
No, title IV eligibility will be verified with current FAFSA information
Not all defaulted student loans are eligible for Fresh Start, please review:
- William D. Ford Federal Direct Loan Program Loans
- Federal Family Education Loans (FFEL) and Federal Insured Student Loans (FISL)
- Federal Perking Loans that are services by the Department’s Debt Management and Collections Systems.
- School-held Perkins Loans
- Health Education Assistance Loan Program
- Student Loans with the U.S. Department of Justice
- Direct Loans and Commercial-held FFEL Program Loans in “Default” status after end of pause - (Currently extended until December 31, 2022).
If you go into default again after Fresh Start, we’ll use your loan’s original date of delinquency in the information we provide to credit reporting agencies. That means that Fresh Start won’t reset how long credit reporting agencies report your loan as in default.
If you’ve been delinquent on a loan for more than seven years, that defaulted loan doesn’t show up on your credit report anymore. If you’re in this situation, we will make sure you won’t get a default reported for the loan anymore. So if you take advantage of Fresh Start but default again, that defaulted loan won’t show up on your credit report.
If you take out a new loan during or after Fresh Start, that new loan won’t be affected by Fresh Start. So if you default on that new loan, it will be reported to credit reporting agencies, and you will experience all the regular effects of default.