There are several options for people who are in default on their federal student loans. The "Fresh Start" program run by the Department of Education provides additional funding until the end of 2023. Some facts about the New Beginning program are as follows.
Your eligibility for federal student loans and grants has been reinstated, so you can apply for funding to return to school. During Fresh Start, you can apply for loan rehabilitation multiple times without it counting toward the normal limit of one. Here are your alternatives if you have fallen behind on your federal student loan payments.
Restructure Your Loan Instead. Rehabilitation of your student loans can get you out of default and back into good standing. To qualify for loan rehabilitation, you must make on-time payments for a set number of months.
Your first step in loan rehabilitation is to get in touch with your loan servicer, which you can do by visiting the Federal Student Aid website.
Reduce Your Monthly Payments by Consolidating Your Student Loans. Consolidating your federal student loans into a single Direct Consolidation Loan can help you save time and money. Consolidating your debts into a single manageable payment can help you get out of default on your loans while also lowering your monthly payments and simplifying your debt repayment process.
For a loan that is currently in default to be consolidated, the borrower must either (1) pay the loan in full for three consecutive months before consolidating, or (2) enroll in an income-driven repayment plan for the consolidated loan.
Send in Your Full Payment
Repaying the principal in full is typically out of reach for students who are already having financial difficulties making their monthly loan payments. It's unlikely that you'll be able to pay off your debt in a single sum if you were having difficulty making the monthly payments prior to default. However, if you pay off the entire outstanding balance, you will no longer be in default and your credit will be reinstated.
Your eligibility for federal student loans and grants has been reinstated, so you can apply for funding to return to school. During Fresh Start, you can apply for loan rehabilitation multiple times without it counting toward the normal limit of one. Here are your alternatives if you have fallen behind on your federal student loan payments.
Restructure Your Loan Instead. Rehabilitation of your student loans can get you out of default and back into good standing. To qualify for loan rehabilitation, you must make on-time payments for a set number of months.
Your first step in loan rehabilitation is to get in touch with your loan servicer, which you can do by visiting the Federal Student Aid website.
Reduce Your Monthly Payments by Consolidating Your Student Loans. Consolidating your federal student loans into a single Direct Consolidation Loan can help you save time and money. Consolidating your debts into a single manageable payment can help you get out of default on your loans while also lowering your monthly payments and simplifying your debt repayment process.
For a loan that is currently in default to be consolidated, the borrower must either (1) pay the loan in full for three consecutive months before consolidating, or (2) enroll in an income-driven repayment plan for the consolidated loan.
Send in Your Full Payment
Repaying the principal in full is typically out of reach for students who are already having financial difficulties making their monthly loan payments. It's unlikely that you'll be able to pay off your debt in a single sum if you were having difficulty making the monthly payments prior to default. However, if you pay off the entire outstanding balance, you will no longer be in default and your credit will be reinstated.
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