B. Grant McNutt

The U.S. Department Of Education Is Giving Borrowers Who’ve Fallen Behind On Their Student Loans A Chance To Get Into Current Standing.

Collection Activity Will Also Be Suspended For A Year After The Covid-19 Pause Ends.

If your loans are eligible, you’ll temporarily regain several student aid and credit reporting benefits. You’ll also get the opportunity to get out of default and keep those benefits for the long term.

A Fresh Start For Federal Student Loan Borrowers In Default

Benefits Available Now

• Stopped Collections – The collections relief you’ve gotten during the COVID-19 payment pause continues during Fresh Start. You’ll continue to get the following collections relief:

o Tax refunds (and child tax credits) will not be withheld.

o Wages will not be garnished.

o Social Security payments (including disability benefits) will not be withheld.

o Collection calls will not be made.

• Eligibility for Other Government Loans – Reporting of your default status in the government credit reporting system (CAIVRS) is rescinded. With this Fresh Start benefit, you may become eligible for certain types of government-backed loans, such as mortgages.

• Restored Ability to Rehabilitate Loans – Fresh Start will not count as your one chance at rehabilitating your loan(s). If you go into default again and want to rehabilitate your loan(s) later, you can.

Benefits To Be Made Available Later

• Account Reporting Status – Your defaulted loan(s) will be reported as “current” rather than “in collections” to credit reporting agencies.

• Access to Income-Driven Repayment (IDR) Plans – Your monthly payment amount can be as low as $0. That’s because on an IDR plan, your monthly payment is based on how much money you make (income) and your family size.

• Access to Short-term Relief (Forbearance and Deferment) – Because of Fresh Start, you’ll be able to get out of default. Then you’ll be able to request short-term relief if you choose.

• Access to Student Loan Forgiveness Programs – If you take advantage of Fresh Start, you’ll get out of default status. Then you’ll regain the ability to apply for forgiveness programs, including Public Service Loan Forgiveness.


Eligibility depends on the kind of loans you have, and at what point the loans defaulted. Defaulted Perkins loans held by a school and private student loans won’t be included in the relief. If you default on your federal student loans after the payment pause ends, you’ll miss out on the opportunity.

How Will This Impact My Credit Score And Report?

Under the Fresh Start initiative, the Education Department will delete reporting on loans that have been delinquent for more than seven years. It will also report all other defaulted loans for eligible borrowers to credit reporting agencies as “current”. After you get your loan transferred to a new servicer, you may want to order a free credit report to make sure your loans are no longer marked as delinquent.

Bond & Botes Helps People Struggling with Debt

Contact The Bond & Botes Law Offices

Debt in all forms can be overwhelming. The attorneys here at Bond & Botes provide guidance on helping clients reduce or eliminate debt. If you have student loans and other debts you feel you cannot pay call our offices today for an absolutely free and non-judgmental conversation on how you can get relief from your debt. Call us today and let us help you! We can alleviate your stress! We want to help and we can help you! 

Bond, Botes, Sykstus, Tanner & McNutt, P.C.

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