President Joe Biden recently addressed student loan relief at Madison College in Wisconsin on April 8. He spoke about the upcoming expiration of two federal measures designed to assist student loan borrowers with their payments. These measures have been providing support since federal student loan payments resumed last October.
One of the supports set to expire is a grace period for missed or late payments, which will end on Monday. The second program, known as Fresh Start, is for defaulted loans and the deadline for enrollment is this Wednesday. Defaulted borrowers have until Wednesday at 3 a.m. ET to sign up for Fresh Start.
The expiration of these two supports means that borrowers with delinquent payments or defaulted loans will once again face consequences such as having their wages seized or negative credit reporting. The Biden administration’s income-driven repayment plan, SAVE, is currently on hold due to legal challenges, which has added to the uncertainty for borrowers.
While borrowers can still apply for SAVE, the program remains paused due to a federal appeals court injunction. Borrowers are encouraged to apply for help with defaulted loans before the Wednesday deadline in order to prevent falling further behind.
Fresh Start has been providing defaulted borrowers with assistance to prevent them from facing collection efforts and negative credit reporting. By signing up for the program, defaulted borrowers can have their loans put back in repayment status and have the record of default removed from their credit report. Access to federal student aid can also be restored through this program.
To enroll in Fresh Start, defaulted borrowers must contact their loan holder. The process is simple and can be done via mail, phone, or online. It is important for borrowers to take advantage of this opportunity before the Wednesday deadline to secure permanent access to Fresh Start benefits.
Starting Tuesday, the federal government will resume reporting delinquent payments to credit agencies. This means that borrowers who miss payments moving forward will likely see a negative impact on their credit report. The previous 12-month period where missed payments were not reported is coming to an end, and delinquent payments will once again be reported after 90 days.
As the deadline for these federal measures approaches, it is crucial for student loan borrowers to be aware of the changes and take necessary steps to avoid negative consequences. Seeking assistance through programs like Fresh Start can help borrowers get back on track with their student loan payments and prevent further financial hardship.
