FOR IMMEDIATE RELEASE
Contact: Hugh Ferguson
Managing Editor, NASFAA
[email protected]

WASHINGTON, D.C., SEPTEMBER 27, 2024 — As the U.S. Department of Education winds down two key safeguards for student-loan borrowers, the National Association of Student Financial Aid Administrators (NASFAA) is encouraging colleges and universities to inform borrowers of the changes and necessary steps to a satisfactory loan repayment history.

The department has offered the Fresh Start and On-Ramp to Repayment as temporary relief measures since loan payments resumed in October 2023 following the COVID-19 pandemic. Fresh Start is a path toward good repayment standing for borrowers with defaulted federal student loans, while the On-Ramp initiative protects some borrowers from negative credit reporting stemming from missed, late, or partial payments.

Both offerings will expire on September 30. Without taking proactive strategies now, borrowers eligible for these programs could risk debt-collection referrals, damage to their credit, and other financial consequences. NASFAA offers a comprehensive Student Loan Repayment Toolkit to inform those strategies and guard against scams.

“Over the past year, Fresh Start and the On-Ramp program have been valuable lifelines for borrowers who struggle with loan repayment,” says Karen McCarthy, NASFAA vice president of public policy and federal relations. “These programs have helped borrowers put their financial lives back together and shielded them from long-term harm to their financial well-being.”

“As the government sunsets these safety nets, it’s especially critical that the department conduct direct outreach to these borrowers to explain the current status of the income-driven repayment (IDR) plans. Recent court challenges to the Saving on a Valuable Education (SAVE) plan has left borrowers confused about whether these plans are still an option, how to apply for them, and what happens after they apply.”

McCarthy encourages borrowers eligible for Fresh Start to apply immediately, before the September 30 cut-off. As the Education Department notes, the application process can take less than 10 minutes and be completed online, by phone, or via postal mail. Borrowers with defaulted Perkins Loans held by the department, as well as those with defaulted loans through the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program, are eligible to participate.

Once accepted into Fresh Start, borrowers are automatically placed on a Standard Repayment Plan. Most participating borrowers choose to apply for an income-driven repayment plan, or IDR, which customizes monthly payments to reflect income. While online IDR applications are temporarily down, borrowers may still apply to consolidate loans or enroll in an IDR plan by submitting a paper application to their servicers. 

Under the 12-month On-Ramp program, borrowers who benefited from the COVID-19 payment pause have not been considered delinquent, reported to credit bureaus, placed in default, or referred to debt collectors for missing monthly payments. The program’s conclusion means the end of that transitional period.

Amid these shifts, NASFAA’s repayment toolkit can help prepare borrowers and campus leaders for the next steps, and provides a range of social media posts, how-to infographics, and videos available for widespread use.

Among the best practices that NASFAA advocates for borrowers resuming repayment:

Consider your repayment strategy and decide whether to change plans. Income-driven repayment plans may offer lower monthly payments than standard plans.

Review personal budgets to ensure required monthly payments aren’t out of reach. 

Keep good records. Detailed documentation of financial aid and loan-servicer records and communications are key, especially if questions arise later.

Be alert to avoid scams. Don’t pay outside entities to help with student loans, and don’t share personal information by phone unless you have initiated the contact.

NASFAA policy experts are available to speak to members of the media about best practices for student loan borrowers. To set up an interview, please email [email protected].

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About NASFAA 

The National Association of Student Financial Aid Administrators (NASFAA) is a nonprofit membership organization that represents more than 29,000 financial aid professionals at approximately 3,000 colleges, universities, and career schools across the country. NASFAA member institutions serve nine out of every 10 undergraduates in the U.S. Based in Washington, D.C., NASFAA is the only national association with a primary focus on student aid legislation, regulatory analysis, and training for financial aid administrators.