Fresh Start initiative allows borrowers with federal student loans in default to reenter current repayment and regain access to aid

The Fresh Start initiative was announced by the U.S. Department of Education (ED) last April. Fresh Start gives borrowers with defaulted student loans the opportunity to reenter current repayment.

The initiative will be in effect for one year after the COVID payment pause ends.

Fresh Start is an opportunity for colleges to recruit non-completers back to school.

First-generation students and borrowers who do not complete their program of study are at a higher risk of default. Under the Fresh Start initiative, borrowers with defaulted federal student loans can apply for financial aid through FAFSA to return to school. Once the new aid is disbursed, the borrower’s eligible defaulted loans will be transferred to a non-default servicer and default status will be removed from the borrowers’ credit reports.

Most defaulted borrowers are unaware of Fresh Start

As a student loan support service, IonTuition regularly reaches out to delinquent and defaulted borrowers to help them into sustainable repayment plans on behalf of our higher education clients. Most borrowers are aware of the repayment pause but are surprised to hear that they have the chance to return to school and complete their degree. Even borrowers who had already rehabilitated their loans are eligible for Fresh Start.

Most borrowers who don’t complete their program carry smaller loan amounts (under $5,000) and defaulted on their loans because they couldn’t afford their payments. We help those borrowers take advantage of the Fresh Start program and get into income-driven repayment plans so that when repayment resumes they’ll be able to stay current. Since they’re returning to school, they’ll likely earn a higher income after graduation and be able to repay their loans sooner. 

Contact to discuss how IonTuition can reach out to your former students and help them take advantage of the Fresh Start initiative.