Department Of Education’s Fresh Start Program Set To End

112 consumer advocacy groups wrote a letter to the US Department of Education on Sept. 19, imploring the department to extend the program.

The Department of Education’s Fresh Start program is scheduled to sunset on Sept. 30, and borrowers who are delinquent on their payments are being encouraged to either apply for the program before applications close or contact their loan servicers to learn more about their options.

According to Fox 26, 112 consumer advocacy groups wrote a letter to the U.S. Department of Education on Sept. 19, imploring the Department to extend the Fresh Start program.

The letter notes that borrowers are dealing with chaos and uncertainty due to legal challenges mounted against the Biden administration’s SAVE plan.

“Over the last few months, borrowers have faced major chaos and uncertainty in the wake of legal challenges to the historic Saving on A Valuable Education (SAVE) repayment plan, which was implemented to give borrowers better access to affordable monthly payments to protect them from financial harm. Eight million borrowers had already enrolled in the SAVE Plan—having planned their and their family’s finances around it—when they were abruptly notified that they would no longer have access to it (or to other affordable repayment options) for the foreseeable future.” The letter stated. “Borrowers are now desperately trying to understand how to manage their student loan debt with limited options for making affordable monthly payments or progressing toward promised forgiveness via Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) loan forgiveness.”

The letter continued, “Amidst all of this chaos, September marks the final month of two important initiatives: (1) the Administration’s current “on-ramp” protections, which have helped shield borrowers from many of the harshest economic consequences of falling behind on their student loans, and (2) the deadline to enroll in the “Fresh Start,” program, which enables borrowers in default to get back into repayment more easily.” The letter also called for the Department of Education to extend the programs. “We urge the Department to extend these two pivotal programs. The on-ramp protection period must continue to hold student loan borrowers harmless for missed payments during this tumultuous time, and the Fresh Start program should continue to be available to defaulted borrowers who have not yet enrolled in it. No borrower should be forced into delinquency, default, or collections while they are unable to access the full suite of affordable repayment options they are entitled to under the law.”

According to the Center for American Progress, the regulations proposed by the Biden-Harris administration would have greatly benefited those struggling to repay student loans. They would have brought full or partial relief to approximately 75% of borrowers.

Their analysis also showed that the planned “Plan B” relief program would benefit Black Americans who owe student loans. Approximately 6 million Black Americans, or 23% of the estimated borrowers, would have received relief from the Fresh Start program. That figure, which doubles the Black representation in the general population figures, signals that more Black students who must take out loans often face more difficulty repaying loans and, therefore, stay in the loan repayment system longer than other ethnicities.

Following the Supreme Court’s decision in 2023 to block President Biden’s student debt relief program, Deiondra Lee-Sanders wrote an op-ed for EdTrust outlining how the ruling impacted her and Black borrowers in general.

“Under Biden’s plan, I would have qualified for $20,000 in student loan debt forgiveness, which would have cut my debt-to-income ratio and improved my credit score, which has suffered because of my student loan debt. It would have allowed me to save something for emergencies and my future and help my family. I would have been able to explore a broader range of career options and jobs outside the low-paying public sector, which are a prerequisite for Public Service Loan Forgiveness.”

Sanders continued, “An estimated 8.5 million Black Americans have student loans, and they owe nearly $53,000, on average, after graduation. Black students make up only 14% of the college-age population, but they take on 25% of all federal student loans. Black women are the most likely to have student debt and graduate with an average of $38,800 in federal undergraduate loans, which is higher than any other student group. Black women who graduate from graduate school owe over $58,252, on average, in student loan debt. They’re also more likely than any other group to default on their loans. As a result, many Black women may not be able to achieve their financial goals.”

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