Student Loan Forgiveness: Biden’s ‘Fresh Start’ Plan Deemed $34 Billion Success — How It Benefits Borrowers

US President Joe Biden Makes Unannounced Visit to Ukraine's Kyiv - 20 Feb 2023
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President Biden’s Fresh Start program has placed $34 billion worth of delinquent or defaulted student loan accounts into “current” status.

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According to the New York Federal Reserve’s Q4 2022 Household Debt and Credit report, the initiative has resulted in less than 1% of all student debt being delinquent or in default.

Fresh Start Program Details

The Fresh Start program will run for one year after the COVID-19 payment pause ends (currently no later than June 30, 2023). As an eligible borrower, you can receive the following benefits:

  • The ability to apply for federal student aid and other federal loans, such as mortgages (revoked when your student loans went into default)
  • Relief from collection calls, wage garnishments, and Social Security and tax refund withholding
  • The opportunity to rehabilitate student loans at a later date (normally, you only get one chance to do so)
  • Access to income-driven repayment (IDR) plans, student loan forgiveness programs, deferment and forbearance 
  • Removal of the account default from your credit report

However, you must choose to participate in the program by making a repayment arrangement during the Fresh Start period. If you don’t, you’ll lose access to these perks.

Your loans must also be eligible for the program. Eligible loans include defaulted Direct Loans, Federal Family Education Loans (FFEL) and Perkins Loans held by the Department of Education.

Take Our Poll: Do You Think Bankruptcy Is an Acceptable Way To Escape Student Loan Debt?

Strategically Prepare for Repayment

Unless all of your student debt gets forgiven, you’ll soon need to re-factor loan payments into your budget. But you don’t have to sacrifice fun to become debt-free. Instead, consider adding a “lifestyle” line item to your spending plan. Then, use those funds to cover coffee, takeout, event tickets and other discretionary purchases.

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About the Author

Laura has been a freelance writer since 2018. Her work primarily focuses on managing your money, navigating your career, and running a successful business. She earned her MBA and a Bachelor's degree in Psychology during her previous career in human resources. She is also a business coach to new and aspiring freelancers and runs an online resource hub for them called Before You Go Freelance. In addition, she helps other writers get clear on their message, plan their content, and produce compelling written works.
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