08/18/2022

How Education Department Plans to Lift 7.5 Million Borrowers out of Default

Documents provide a first substantial look at the ‘Fresh Start’ initiative

The Biden administration has created a plan to bring 7.5 million Americans in default on their federal student loans back into good standing, restoring their eligibility for financial aid and removing the incident from their credit history, according to documents obtained by The Washington Post.

Anyone now in default on a federal loan made directly by the Education Department, Perkins loans held by the agency and old bank-based debt held by the department or private companies, is eligible for the program. Their eligibility for federal Pell grants, work-study and loans will be reinstated, according to a fact sheet shared with Congress and advocacy groups this week.

The document provides the first substantial look at how the Education Department plans to execute the “Fresh Start” initiative announced this spring to help borrowers exit default, sparing them from the seizure of wages, tax refunds and Social Security benefits.

Please select this link to read the complete article from The Washington Post.