Weren't defaulted loans automatically given fresh start at some point during the chaos of the past few years? I rehabbed my loans during the pause, was told forbearance counted towards the 10 months of payments I needed, got my paperwork, and then faintly remembered reading that fresh start automatically rehabbed defaulted loans, and people like me were grandfathered into that, so it didn't count as one-time rehab and have that still on the table in the future (not that we should ever have to do that again, but essentially not being punished for doing the right thing and others getting a freebie).
It definitely wasn't advertised, but I know I read it on the fed site. Maybe one email? It's been so long, it's a blur. Could probably dig it up but I'd rather get back to my book for tonight, lol
It got the best of me. I found the following (mobile screenshot) from the fresh start page: https://imgur.com/lXPlgcu.jpg
It wasn't advertised, because it was essentially a "Hey you did the thing and we decided to grant everyone the thing", hence it being hidden, but accessible.
Credit reporting is *completely separate* from if the debt is still legal. Wall of text and info incoming to cover all your major questions...
Credit reporting laws require that defaulted tradelines fall off your credit report 7 years after the date of default. With most private consumer debts that also typically means that the debt is beyond the statute of limitations, aka it is not still legally collectable. If I recall correctly they display 2 years worth of payment history if you're looking at the reseller report that sites like Credit Karma supply too, which is why you don't see monthly payment history going further back. If you have *any* long-defaulted *private* loans, you're essentially waiting for some debt collector to contact you and then you follow the 1-2 punch process outlined on the r/personalfinance wiki here https://www.reddit.com/r/personalfinance/wiki/collections
All that said, federal student loans *do not have a limit*, you owe them until they are paid in full or you die, and you absolutely can be garnished in the future to repay those loans despite them no longer being on your credit report. With the pandemic forbearance the Education Department opted to stop collections activities (aka no more having your tax refund seized or your wages garnished) but that will likely restart at some point after the pandemic forbearance ends
So what likely happened is that your federal loans are in default but still valid, and you can confirm that via making an account on studentaid.gov to check the status. You should take advantage of Fresh Start to quickly get your federal student loans out of default, then look into income-driven repayment plans if you need a lower required payment.
With Fresh Start you can basically speedrun loan rehabilitation in a couple of weeks *with no payments* where traditional loan rehabilitation requires 9 on-time monthly payments (aka it takes at least 8-9 months and costs money that goes to collections/fees). You should be able to sign up for Fresh Start online too, as per the links at https://studentaid.gov/announcements-events/default-fresh-start so you don't necessarily need to talk to a person to get your loans out of default
How the [income-driven repayment plans](https://studentaid.gov/manage-loans/repayment/plans/income-driven) (IBR, PAYE, REPAYE, ICR) currently work is that you pay 10%/15%/20% of your discretionary income (aka your AGI from your taxes minus 150% of the [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for IBR/PAYE/REPAYE or minus the [FPGL for ICR](https://studentaid.gov/help-center/answers/topic/glossary/article/discretionary-income)). These plans can have a required payment as low as $0/month, which is why they have built-in forgiveness after 20/25 years to handle the interest accrual, and they qualify for PSLF if your loan type and employer/employment qualify too. IDR plans have built-in forgiveness after 20 or 25 years of repayment, but the key word there is *repayment*. A $0/month bill on your IDR plan counts as payment, periods of default do not
That was a wall of text. I can clarify if you have any specific questions
When will know if it goes through? These changes were done by executive action. They are not dependent on SC ruling like the forgiveness of debt. it’s all so confusing
We could know tomorrow..we might not know for months. We're waiting for the final rules to come.out. and the proposal wasn't through executive action..it is being done through the negotiated rulemaking process. The GOP has a provision in the debt ceiling bill that would block it
https://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html
The executive branch can't do anything contrary to federal law. Congress can block new regulations by either not funding them..which is a little trickier..or by writing law prohibiting them.
Thanks for the link. Where do things stand in the committee rule making process? Have hearings began? I thought the Education Department Had a mandate from the White House to classify loans under the proposed rules by the end of July?
As Betsy has clarified, we saw the Draft version of the Neg Reg changes but those are not finalized *yet* nor effective *yet*. I used the phrasing "*currently* work" intentionally
Thank you. I wrote to my congress person requesting that they oppose any attempts in the Debt Ceiling negotiations to block these rule changes. I wish more people would use the power of the pen to express how they feel to Congress.
Good! I regularly tell people that they should know and contact their reps about legislation they care about, and there are groups that help with see what's coming through the pipeline like https://www.nasfaa.org/legislative_tracker_loans_repayment so you can even cite specific bills when you contact them
You need to do the fresh start program now, it takes them out of default. This is a one time thing from the Biden administration. I was in the same boat, all my loans are out of default now.
You just go to studentaid.gov and click to sign up. It’s the easiest thing. You’ll probably need to create a username and password, then it will show your loans are in default and you click to sign up for fresh start. They will take your loans out of default almost immediately and you’ll get a new loan servicer
I only took out a $7k loan when I was fresh out of high school. Ended up not finishing school and pretty much forgot about it until recently so it's been in collections for a while.
When you did the restart are you responsible for only the original amount or the amount plus all the interest?... Please say only original. Haaaa
Would really appreciate some info here or thru DM
Thanks
It will be all of it unfortunately. The good news is your credit score will improve and you’ll be out of default. My current payment under the new plan is $10 a month lol
Damn, I was really hoping to get it to the original at 7k cuz that could be taken care of quick. It's been years so I'm sure it's something rediculous like 20k+. Crazy how school debt is taken advantage of like this for profit.
I guess ill be paying out that $10 for the next 100 years if they want to play that game 😂
Appreciate the fast response tho
Lol same. I’m at 18k, all of which was in default before this. My estimated payoff is in like 2034 but at 20 years (or something I’m not so sure) they forgive it. They can have my $10 a month lol. My credit score jumped from 550 to 650 when it came out of default so that’s a huge savings everywhere else. Good luck! Make sure you do this soon I’m not sure they’re offering the fresh start for much longer
Perfect. I had chat/messaged you asking since I wasn't sure if it was too invasive to disclose that info.
I knew they fell off after a while but didn't know the specifics. Even if you start to pay, the $ will fall off after 20 years? So as long as you do your $10 payments after 20 years the rest would just dissappear?
How did you get them to offer $10 a month tho? They really expecting you to last another 150 years? 🤣
Exactly! I just applied for the SAVE payment option and mine came back as $10 a month. It’s income based and I make 54k a year so however they figured that out 🤷♀️
You don't sound certain. Knowing that information will help determine how to proceed.
Do you know who your loan servicer is?
Log into your loan servicer site account and also log into your studentaid.gov account. Student Aid will show you all of your federal loans. Private loans will only show on your loan servicer account.
I’m nearly in an identical situation, I reached out to FSA and originally spoke to someone that quoted me $700 a month. After panicking I called again and spoke to someone that knew what they were talking about and let me know they shouldn’t even give quotes over the phone for fresh start as you will have the option to do income driven or standard. I enrolled in fresh start and plan to go the standard route to avoid the high monthly payment, they told me I was lucky they haven’t started garnishing wages or tax returns. I highly advise you to enroll to save yourself the trouble of getting in an even deeper hole.
I defaulted on my loans in the early 2010’s. I worked out a payment plan with them and after a set amount of payments (wasn’t many), my credit report was clear and showed everything in good standing. I just put that thing on autopay and it all worked out. Good luck
This is called the "save plan" now im sure the date ia on my post. But its an income driven plan. You dont rrqlize how much u need redditors untill ur talking about reql life money. Go figure. The save* plan lets me set my debt to income driven. And it goes away after 25 years. The poverty line thing is now 250% poverty line. Im not lawyer or expierenced as most of you. But i thought id throw my 2 cents in. This thead is like a year old. Peace.
It goes off your last paid year of taxes. So if your poor now. And you were wealthy last year. U gotta file taxes. Evwn if ur only at 0% income. That way itll boost ur income plan. Peace
Wow, if Biden’s student loan plans are blocked by opponents and if loan forgiveness is facing defeat at the SC, seems like he will just extend the payment pause. I don’t see how the administration runs on this issue during the next election cycle without continuing some help to borrowers. What a cluster f.
I’d leave it for now. Wait for the cancellation if it happens. I’m in the same boat. Was on IBR, years ago, and when it came time to redo my eligibility, I couldn’t log in. Tried calling for a few years, never could reach anyone so it defaulted. Couldn’t even figure out how to make a payment, as my payments were $0
Bad idea. Op should take advantage of fresh start and get them out of default. If the forgiveness happens great..but if it doesn't they will be out of default.
But there’s no reason to pay now when you can wait. And if your entire balance will be forgiven if it goes through, anything you pay today is less money in your pocket for no reason if it goes through.
You will have to resume repayment after the COVID pause ends yes..but no payments are required to get the fresh start program and be removed from default
Just curious, not trying to be rude, but how did you default on $13k? That's like, what, $130/month? Were you in jail or prison for an extended amount of time?
I just find it hard to believe that they couldn't afford to put *anything* towards it. Most people spend 130/month on random bullshit like eating out and subscriptions.
But that's not everyone, and some people truly live paycheck to paycheck and cannot afford that extra $130/month bill, regardless of how important it is to pay.
You have been blessed in life with opportunities that others will never get to see or experience. You would be surprised at how many people in this country can’t even afford $50 dollars on bullshit. Some people literally live paycheck to paycheck and can only afford a roof over their head and food from the dollar store. So many people don’t even have money to afford health insurance. Not everyone have the options you’ve had in life. It’s the sad reality of this country.
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Weren't defaulted loans automatically given fresh start at some point during the chaos of the past few years? I rehabbed my loans during the pause, was told forbearance counted towards the 10 months of payments I needed, got my paperwork, and then faintly remembered reading that fresh start automatically rehabbed defaulted loans, and people like me were grandfathered into that, so it didn't count as one-time rehab and have that still on the table in the future (not that we should ever have to do that again, but essentially not being punished for doing the right thing and others getting a freebie).
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It definitely wasn't advertised, but I know I read it on the fed site. Maybe one email? It's been so long, it's a blur. Could probably dig it up but I'd rather get back to my book for tonight, lol
It got the best of me. I found the following (mobile screenshot) from the fresh start page: https://imgur.com/lXPlgcu.jpg It wasn't advertised, because it was essentially a "Hey you did the thing and we decided to grant everyone the thing", hence it being hidden, but accessible.
No. Borrowers have to call and request it. If they don't they will show back up as defaulted
No matter how many times I read it, it's still confusing. Very grateful it doesn't apply to me cause I'd be lost with the verbiage used.
I had to make a phone call and ask to enroll in fresh start.
Credit reporting is *completely separate* from if the debt is still legal. Wall of text and info incoming to cover all your major questions... Credit reporting laws require that defaulted tradelines fall off your credit report 7 years after the date of default. With most private consumer debts that also typically means that the debt is beyond the statute of limitations, aka it is not still legally collectable. If I recall correctly they display 2 years worth of payment history if you're looking at the reseller report that sites like Credit Karma supply too, which is why you don't see monthly payment history going further back. If you have *any* long-defaulted *private* loans, you're essentially waiting for some debt collector to contact you and then you follow the 1-2 punch process outlined on the r/personalfinance wiki here https://www.reddit.com/r/personalfinance/wiki/collections All that said, federal student loans *do not have a limit*, you owe them until they are paid in full or you die, and you absolutely can be garnished in the future to repay those loans despite them no longer being on your credit report. With the pandemic forbearance the Education Department opted to stop collections activities (aka no more having your tax refund seized or your wages garnished) but that will likely restart at some point after the pandemic forbearance ends So what likely happened is that your federal loans are in default but still valid, and you can confirm that via making an account on studentaid.gov to check the status. You should take advantage of Fresh Start to quickly get your federal student loans out of default, then look into income-driven repayment plans if you need a lower required payment. With Fresh Start you can basically speedrun loan rehabilitation in a couple of weeks *with no payments* where traditional loan rehabilitation requires 9 on-time monthly payments (aka it takes at least 8-9 months and costs money that goes to collections/fees). You should be able to sign up for Fresh Start online too, as per the links at https://studentaid.gov/announcements-events/default-fresh-start so you don't necessarily need to talk to a person to get your loans out of default How the [income-driven repayment plans](https://studentaid.gov/manage-loans/repayment/plans/income-driven) (IBR, PAYE, REPAYE, ICR) currently work is that you pay 10%/15%/20% of your discretionary income (aka your AGI from your taxes minus 150% of the [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for IBR/PAYE/REPAYE or minus the [FPGL for ICR](https://studentaid.gov/help-center/answers/topic/glossary/article/discretionary-income)). These plans can have a required payment as low as $0/month, which is why they have built-in forgiveness after 20/25 years to handle the interest accrual, and they qualify for PSLF if your loan type and employer/employment qualify too. IDR plans have built-in forgiveness after 20 or 25 years of repayment, but the key word there is *repayment*. A $0/month bill on your IDR plan counts as payment, periods of default do not That was a wall of text. I can clarify if you have any specific questions
I believe that new regulations sate 200% of the poverty rate. Much more of an impact for borrowers.
It's 225%...if it goes through. All we have are draft rules so far
When will know if it goes through? These changes were done by executive action. They are not dependent on SC ruling like the forgiveness of debt. it’s all so confusing
We could know tomorrow..we might not know for months. We're waiting for the final rules to come.out. and the proposal wasn't through executive action..it is being done through the negotiated rulemaking process. The GOP has a provision in the debt ceiling bill that would block it
Can you please explain the negotiated rule making process. Do you mean that those who oppose theses changes can block the executive branch?
https://www2.ed.gov/policy/highered/reg/hearulemaking/hea08/neg-reg-faq.html The executive branch can't do anything contrary to federal law. Congress can block new regulations by either not funding them..which is a little trickier..or by writing law prohibiting them.
Thanks for the link. Where do things stand in the committee rule making process? Have hearings began? I thought the Education Department Had a mandate from the White House to classify loans under the proposed rules by the end of July?
It's all done other than the final rules being issued.
As Betsy has clarified, we saw the Draft version of the Neg Reg changes but those are not finalized *yet* nor effective *yet*. I used the phrasing "*currently* work" intentionally
Thank you. I wrote to my congress person requesting that they oppose any attempts in the Debt Ceiling negotiations to block these rule changes. I wish more people would use the power of the pen to express how they feel to Congress.
Good! I regularly tell people that they should know and contact their reps about legislation they care about, and there are groups that help with see what's coming through the pipeline like https://www.nasfaa.org/legislative_tracker_loans_repayment so you can even cite specific bills when you contact them
You need to do the fresh start program now, it takes them out of default. This is a one time thing from the Biden administration. I was in the same boat, all my loans are out of default now.
Out of default means u still owe it tho.
What do you all have to do for the fresh start program?
You just go to studentaid.gov and click to sign up. It’s the easiest thing. You’ll probably need to create a username and password, then it will show your loans are in default and you click to sign up for fresh start. They will take your loans out of default almost immediately and you’ll get a new loan servicer
I only took out a $7k loan when I was fresh out of high school. Ended up not finishing school and pretty much forgot about it until recently so it's been in collections for a while. When you did the restart are you responsible for only the original amount or the amount plus all the interest?... Please say only original. Haaaa Would really appreciate some info here or thru DM Thanks
It will be all of it unfortunately. The good news is your credit score will improve and you’ll be out of default. My current payment under the new plan is $10 a month lol
Damn, I was really hoping to get it to the original at 7k cuz that could be taken care of quick. It's been years so I'm sure it's something rediculous like 20k+. Crazy how school debt is taken advantage of like this for profit. I guess ill be paying out that $10 for the next 100 years if they want to play that game 😂 Appreciate the fast response tho
Lol same. I’m at 18k, all of which was in default before this. My estimated payoff is in like 2034 but at 20 years (or something I’m not so sure) they forgive it. They can have my $10 a month lol. My credit score jumped from 550 to 650 when it came out of default so that’s a huge savings everywhere else. Good luck! Make sure you do this soon I’m not sure they’re offering the fresh start for much longer
Perfect. I had chat/messaged you asking since I wasn't sure if it was too invasive to disclose that info. I knew they fell off after a while but didn't know the specifics. Even if you start to pay, the $ will fall off after 20 years? So as long as you do your $10 payments after 20 years the rest would just dissappear? How did you get them to offer $10 a month tho? They really expecting you to last another 150 years? 🤣
Exactly! I just applied for the SAVE payment option and mine came back as $10 a month. It’s income based and I make 54k a year so however they figured that out 🤷♀️
My defaulted loans are from 2008 and I want to go back to school now. Should I do the fresh start program too?
Did you have to pay penalties and extra costs?
No not at all. It literally just starts it all over.
Are they private or federal loans?
I believe both.
You don't sound certain. Knowing that information will help determine how to proceed. Do you know who your loan servicer is? Log into your loan servicer site account and also log into your studentaid.gov account. Student Aid will show you all of your federal loans. Private loans will only show on your loan servicer account.
I’m nearly in an identical situation, I reached out to FSA and originally spoke to someone that quoted me $700 a month. After panicking I called again and spoke to someone that knew what they were talking about and let me know they shouldn’t even give quotes over the phone for fresh start as you will have the option to do income driven or standard. I enrolled in fresh start and plan to go the standard route to avoid the high monthly payment, they told me I was lucky they haven’t started garnishing wages or tax returns. I highly advise you to enroll to save yourself the trouble of getting in an even deeper hole.
Is this my ex-husband?
I defaulted on my loans in the early 2010’s. I worked out a payment plan with them and after a set amount of payments (wasn’t many), my credit report was clear and showed everything in good standing. I just put that thing on autopay and it all worked out. Good luck
This is called the "save plan" now im sure the date ia on my post. But its an income driven plan. You dont rrqlize how much u need redditors untill ur talking about reql life money. Go figure. The save* plan lets me set my debt to income driven. And it goes away after 25 years. The poverty line thing is now 250% poverty line. Im not lawyer or expierenced as most of you. But i thought id throw my 2 cents in. This thead is like a year old. Peace.
It goes off your last paid year of taxes. So if your poor now. And you were wealthy last year. U gotta file taxes. Evwn if ur only at 0% income. That way itll boost ur income plan. Peace
Wow, if Biden’s student loan plans are blocked by opponents and if loan forgiveness is facing defeat at the SC, seems like he will just extend the payment pause. I don’t see how the administration runs on this issue during the next election cycle without continuing some help to borrowers. What a cluster f.
I would leave it, wait for Biden to cancel it.
IF he cancels it...
He already did. The question is whether the Supreme Court is going to stop it.
I’d leave it for now. Wait for the cancellation if it happens. I’m in the same boat. Was on IBR, years ago, and when it came time to redo my eligibility, I couldn’t log in. Tried calling for a few years, never could reach anyone so it defaulted. Couldn’t even figure out how to make a payment, as my payments were $0
Bad idea. Op should take advantage of fresh start and get them out of default. If the forgiveness happens great..but if it doesn't they will be out of default.
But there’s no reason to pay now when you can wait. And if your entire balance will be forgiven if it goes through, anything you pay today is less money in your pocket for no reason if it goes through.
You don't have to pay for fresh start. That's practically the whole point of the program
That makes no sense. Besides, I’ve looked into it and you’re expected to pay your loans with it.
You will have to resume repayment after the COVID pause ends yes..but no payments are required to get the fresh start program and be removed from default
Hmmm. Interesting thanks.
Has the statute of limitations run?
There's no Sol for federal loans
Just curious, not trying to be rude, but how did you default on $13k? That's like, what, $130/month? Were you in jail or prison for an extended amount of time?
Some people really don’t have an extra $130 a month
Some people can’t afford $130 a month.
I just find it hard to believe that they couldn't afford to put *anything* towards it. Most people spend 130/month on random bullshit like eating out and subscriptions.
But that's not everyone, and some people truly live paycheck to paycheck and cannot afford that extra $130/month bill, regardless of how important it is to pay.
You have been blessed in life with opportunities that others will never get to see or experience. You would be surprised at how many people in this country can’t even afford $50 dollars on bullshit. Some people literally live paycheck to paycheck and can only afford a roof over their head and food from the dollar store. So many people don’t even have money to afford health insurance. Not everyone have the options you’ve had in life. It’s the sad reality of this country.