Fresh Start Student Loans: How to Get Debt Relief – AARP

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John Waggoner,
Student loans are a big issue for people 50 and older, who own about 22 percent of all student loans outstanding. For those borrowers who are in default, a U.S. Department of Education (DOE) program called Fresh Start could be a big help. ​
The program, which began in April 2022, can stop collection efforts, move your debt out of default and help you with loan forgiveness. Although the DOE will reach out to most borrowers, you need to make payment arrangements during the Fresh Start initiative or you will be subject to default collections one year after the federal moratorium on collecting student loan payments ends.​
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Federal student loan borrowers have had their payments paused since March 2020 because of the COVID-19 pandemic. The DOE also halted collection efforts for those who have defaulted on their student loans. For those who have defaulted on federal student debt — direct loans, Federal Family Education Loan (FFEL) program loans and Perkins loans — collection efforts can include garnishment of your paycheck and tax return and even up to 15 percent of your monthly Social Security payment. Student loans aren’t generally subject to discharge in bankruptcy.
Here’s what Fresh Start offers:​
If your loan is in default, you’ll have to make payment arrangements with the DOE or your loan servicer to be eligible for Fresh Start. If you have eligible defaulted loans, you can make payment arrangements during the initiative by visiting myeddebt.ed.gov, contacting your loan holder by phone or in writing, or calling the DOE’s Default Resolution Group at 800-621-3115.
When you make your payment arrangements, you’ll be transferred to a loan service that doesn’t specialize in collecting defaulted loans, and the DOE will remove the default from your credit report. After your status has returned to good standing, you will be eligible to enroll in an IDR plan to make your payments more affordable (or as low as zero dollars) when they resume after Jan. 1, the scheduled end date for the federal payment pause. 
AARP Foundation is partnering with Savi, a company that provides digital tools for navigating the student loan system, to help borrowers enroll in IDR plans prior to payments resuming so they won’t be surprised with a large bill come January.
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Some defaulted loans are not eligible for Fresh Start loans: School-held Perkins loans, Health Education Assistance Loan (HEAL) program loans, and direct loans and commercial-held FFEL program loans that default after the end of the pause on student loan payments and collections.
John Waggoner covers all things financial for AARP, from budgeting and taxes to retirement planning and Social Security. Previously he was a reporter for Kiplinger’s Personal Finance and  USA Today.
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