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Senate Democrats Request ED Detail “Fresh Start” Plan

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

A group of Senate Democrats is formally asking that the Department of Education (ED) outline its plans to implement its “fresh start” policy for student loan borrowers so that borrowers who are currently in default will have their delinquency status removed before the payment pause expires.

The policy was unveiled as a part of the administration’s latest continuation of the federal student loan payment pause and pledged to enable borrowers in default to reenter repayment in good standing.

In the letter to ED, spearheaded by Sens. Elizabeth Warren of Massachusetts and Raphael Warnock of Georgia and cosigned by six others, members requested that ED answer a set of specific questions on the proposed policy by May 5, 2022.

The senators, who back in November requested that ED adjust the status of defaulted borrowers before loan repayments resumed, argue that the policy could provide significant relief to millions of borrowers who have struggled to repay their loans.

“A disproportionate number of these borrowers are low income, people of color, first generation college students, veterans, student parents, students with disabilities, and people who did not complete college,” the letter reads.

The letter underscored the impact that ED’s policy could have on borrowers and enable those most adversely impacted by the economic hardships imposed by the pandemic to improve their financial well-being.

“​​Removing these borrowers from default when student loan payments and collections resume means that millions will not be immediately subject to wage garnishment, tax refund withholding, and aggressive collections practices that undermine their economic security,” the letter reads. “Placing borrowers in good standing also makes them eligible to enroll in Income-Driven Repayment (IDR) plans, where families earning less than 150% of the federal poverty line would have a $0 payment on their student loans.”

The senators outline eight specific questions that aim to seek clarity on how many borrowers will benefit from the program, whether the status change will be automated, the notification process, implementation plans, outreach and support made available by the policy and more.

 

Publication Date: 4/27/2022


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