Student Loan Borrowers in Default Get a Do-Over

About 7.5 million student loan borrowers with loans in default are set to get a fresh start — a chance to enter repayment in “good standing” — but only if they opt in.

Borrowers have until one year after the current payment pause expires — currently scheduled for Aug. 31, but expected to be extended — to enroll in the “Fresh Start” program and arrange to make payments, according to the Department of Education. During that year they won’t face collection costs or other punitive consequences of default, such as wage garnishment. But if they don’t act before the one-year limit is up, their loans will remain in default.

The program was announced April 17 as part of the sixth extension of the federal student loan payment pause that first began in March 2020. But it took four months for details to emerge.

Student loans are delinquent when they’re 30 days past due, and they default when the borrower hasn’t made a payment for 270 days. Once that happens, federal aid for school…

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This article was written by Anna Helhoski and originally published on