7.5 million student borrowers get another shot at debt relief. Here’s how to find out if you qualify.


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  • The Department for Education has released details of a plan to help defaulting student loan borrowers.

  • Under the plan, borrowers will have one year after the payment break expires to use the benefits.

  • Here’s how to find out if your loans qualify and what to do next.

Millions of late-paying student borrowers just got new details on how they could get relief.

After extending the student loan payment pause for the fourth time, President Joe Biden’s Education Department in April also announcement what it calls a “fresh start” plan to reinstate 7.5 million defaulting borrowers before they have to re-enter repayment. Failure to pay can have a series of serious consequences for a borrower, such as wage garnishment and garnishment of federal benefits like Social Security.

On Wednesday, the federal student aid office released additional details about the plan, including eligibility requirements and how to access benefits. This comes after James Kvaal, the undersecretary for education, Express the need to put in place additional assistance for defaulting borrowers.

“Defaulting your student loan is about the furthest thing from a get-rich-quick scheme. It’s more like a stay-in-debt-scheme forever,” Kvaal said.

“Overall, loan defaulters are people who have been let down by lagging policies and investments in college affordability,” Kvaal added. “They provide the most compelling evidence that the student loan system needs fundamental change.”

The benefits of the plan are expected to last for one year after the student loan payment break expires, which is currently set for August 31. Although there is speculation the break will be extended again, borrowers have yet to get an update from Biden with less than two weeks until the expected resumption of payments, which means that the plan will start on September 1 according to the current deadlines.

Are my student loans eligible?

First, to determine if you qualify for the plan, you must be in default on one of these types of loans:

  • Loans from the Federal William D. Ford Direct Lending Program

  • Federal Family Education Loan Program (FFEL) loans that belong either to the department or to individuals

  • Perkins loans held by the department

If you have any of these types of defaulted loans, you will not qualify for the plan:

  • Perkins loans held by the school

  • Loans from the Health Education Assistance Loan Program

  • FFEL loans in default after March 2020 and included in the department’s balance sheet Expanded Flexibilities of COVID-19 Reliefduring which the payment pause expanded its scope to include these loans and halt collections, bringing them back into good standing

My loans are eligible. What should I do next?

Once student loan payment resumption begins, you will have one year to begin making payment arrangements through one of the following avenues:

Once you have determined a plan to enter repayment, the department will transfer your loans to a non-default student loan company and remove your default status from your credit reports. As the fact sheet indicates, if you do not reach payment arrangements within one year, your debt will be subject to the consequences of default after the year is over, which could include wage garnishment, garnishment of federal benefits, and credit reports.

What benefits will I receive through this plan?

If your defaulted loans qualify for the plan, you should be eligible for the following benefits:

  • Access to repayment plans such as income-contingent repayment and targeted loan forgiveness through programs such as civil service loan forgiveness

  • Access to federal student aid to pursue or complete college, which requires an application

  • No collection efforts during the one-year period, including wage garnishment and garnishment of federal benefits

  • Marking all delinquent loans as “in progress” and not in collection status and suppressing reports on loans delinquent for more than seven years

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