COLORADO SPRINGS — The Department of Education is urging about 90,000 Colorado student loan borrowers in default to enroll in its ‘Fresh Start’ program before September 30 to avoid several negative consequences.
Before the pandemic, there were around 7.5 million student loan borrowers who defaulted on their loans, meaning they hadn’t made payments for about a year, according to the Department of Education.
Being in default means the government could garnish wages from paychecks, withhold tax refunds or Social Security benefits, or report the default to the major credit bureaus, which can negatively impact a credit score.
“The bottom line is, payments have been required for the last year. These programs have helped provide support for borrowers who need a little extra time,” said Rich Williams, deputy assistant secretary for the Department of Education. “There's still a lot of flexibility in the student loan repayment system, and we stand ready to help borrowers regardless of their financial situation.”
Williams said the Fresh Start program is a limited-time option for those borrowers in default to help get them back on track to repay their loans or take advantage of several other options aimed at helping.
The Fresh Start program can help those Coloradans in loan default by offering Income-Driven Repayment Plans, regain eligibility to make progress toward loan forgiveness programs, remove the default from credit reports, avoid wage garnishments, or protect their federal benefits systems.
The student loan repayment on-ramp program also ends on Sept. 30. The on-ramp period was designed to help student loan borrowers ease back into repayments last October after years of payment pauses and other fluctuations caused by the COVID-19 pandemic. Though interest still accrued, missed payments didn’t affect credit scores.
“These are pandemic-related temporary programs that expire at the end of this month, and borrowers who engage now have the best opportunities to take advantage of them,” said Williams. “It'll be easier to get loans out of default than after the deadline expires.”
Those affected either by the Fresh Start program or the on-ramp period should have received an email or notice from the department. If not, they’re encouraged to reach out for support by the end of the day on Sept. 30, though it’s recommended to do so immediately.
Borrowers can contact myeddebt.ed.gov or call 1-800-621-3115. They can also visit StudentAid.gov/freshstart.
Email Senior Reporter Brett Forrest at brett.forrest@koaa.com. Follow @brettforrestTVon X and Brett Forrest News on Facebook.
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