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Department of Insurance, Securities and Banking

Fresh Start Initiative for Eligible Federal Student Loan Borrowers

Eligible federal student loan borrowers can be brought out of default thanks to Fresh Start, an initiative launched by the US Department of Education (ED) on April 6, 2022. Fresh Start allows borrowers with eligible defaulted federal student loans to apply for federal student aid so that they may complete their degree. Currently, eligible defaulted borrowers can apply for federal grants, loans or work-study funds through the Free Application for Federal Student Aid (FAFSA) form.

Once new aid is disbursed to borrowers under Fresh Start, ED will transfer their eligible defaulted federal student loans to a non-default servicer, which will remove the loans’ default status from borrowers’ credit reports. This action allows the borrower to remain eligible to receive federal student aid beyond the Fresh Start period.

The Benefits of Fresh Start for Eligible Loans

  • Restores access to repayments options including income driven repayment plans and the opportunity to pursue loan forgiveness.
  • Restores eligibility to receive federal student aid including Federal Pell Grants and work-study.
  • Protects borrowers from wage garnishments and costly collection fees.
  • Restores eligibility for future loan rehabilitation for borrowers who rehabilitated during the pause. Note: Typically, rehabilitation is only available once per borrower.
  • Removes student loan borrowers from the federal Credit Alert Verification Reporting System (CAIVRS), making it easier for them to afford living expenses as they become eligible for lower interest rates and more favorable credit terms.

Loans Eligible for Fresh Start

  • Defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans
  • Defaulted Federal Family Education Loan (FFEL) Program loans (both ED-held and commercially held)
  • Defaulted ED-held Perkins Loans

How do I take advantage of Fresh Start?
Borrowers with eligible defaulted federal student loans can take advantage of Fresh Start by calling the Default Resolution Group at (800) 621-3115, visiting, or contacting their loan holder by phone or in writing.

Borrowers who make payment arrangements will be transferred to a non-default loan servicer. ED will remove the default status of the loans from the borrowers’ credit reports, which will allow borrowers to enroll in an income driven repayment plan (IDR).

Ultimately, borrowers with Fresh Start eligible loans must make arrangements for long-term payments with ED. Borrowers who do not make payment arrangements during the Fresh Start initiative will be subject to default collections one year after the payment pause ends.

More Info
If you would like more information on student loan repayment options, send an email to DISB at [email protected] or visit