The Biden administration has briefly extended the deadline for a key federal student loan relief program. The move gives borrowers an extra day to take advantage of a unique opportunity.

Under the Fresh Start program, borrowers who defaulted on their federal student loans were shielded from collection activity last year. These include negative credit reports, wage garnishments, and the offset of federal benefits, including Social Security. And by enrolling in Fresh Start, borrowers can get out of default and get their loans back into good standing so they can take advantage of federal student loan forgiveness and repayment programs.

But Fresh Start is a one-time program and should end on Monday, September 30th. The Department of Education has now extended the deadline to 3 a.m. Eastern Time on Wednesday, October 2nd.

“Extended deadline!” Education Undersecretary of State James Kvaal announced in a statement on X on Monday. “By tomorrow, borrowers with defaulted loans have another chance to regain a good reputation.”

Borrowers need to know this:

A fresh start can resolve defaults and allow borrowers to receive credit toward student loan forgiveness

The Fresh Start program is a temporary Biden administration initiative that does two main things.

First, many of the protections associated with Covid-19 forbearance that protected borrowers from the negative consequences of defaulting on their federal student loans have been expanded. These include negative credit reports, government wage garnishments (which do not require litigation or a court order), seizure of federal tax refunds, and offsetting of Social Security and other federal benefits and income streams.

Second, Fresh Start offers borrowers the opportunity to move their federal student loans out of default and back into good standing. This will allow borrowers to regain access to federal student aid, take advantage of affordable repayment programs including income-driven repayments, and potentially find a path to eventual student loan forgiveness.

According to the Department of Education, borrowers who enroll in Fresh Start on time can also receive IDR student loan forgiveness credit from March 2020 through the date of their enrollment (which typically occurs after 20 or 25 years of repayment under an IDR). plan). except for default. That’s potentially more than 4.5 years of IDR credit for student loan forgiveness.

Restart period extended after website issues

Fresh Start is a one-time initiative and was scheduled to end on September 30, coinciding with the end of a parallel program known as On-Ramp. However, many borrowers had last-minute difficulties logging into Fresh Start because the Department of Education’s web portal was unavailable or slow, preventing them from logging in.

To mitigate these issues, the department has now extended the restart deadline to Wednesday, October 2nd at 3 a.m. Eastern Time. This gives borrowers a little more time to enroll before the program ends.

Advocates are urging the Biden administration to extend the protections associated with Fresh Start for much longer. So far, however, the ministry appears to be allowing only a very modest extension.

How to sign up for a fresh start

According to the Department of Education, there are several ways to enroll in Fresh Start.

Borrowers who have defaulted on federal student loans held by the department can enroll by phone, online or by mail.

“Go to myeddebt.ed.gov and log in to your account,” states a published Department of Education guide. “This is the easiest option if you know your login.” Alternatively, borrowers can call the department’s Default Resolution Group at 1-800-621-3115. “A representative will ask you for some information to locate your file and then ask why you are calling (your answer: fresh start to get out of bankruptcy),” the department says. “You will also have the opportunity to express interest in an income-driven repayment plan, which will likely qualify you for a lower monthly payment than a standard plan.” Borrowers can also apply by mail, but the application must be postmarked by the deadline.

“It may only take 10 minutes,” Kvaal said in his statement Monday. However, some borrowers reported long call wait times to the Default Resolution Group last week.

However, not all federal student loans are administered by the Department of Education. Some defaulted loans in the FFEL program are held by a guarantee agency. “If your loans are held by a guarantee agency, you must call that agency” to enroll in Fresh Start, the department says.