What is the Fresh Start Initiative?

ED released a Dear Colleague Letter with details of its Fresh Start Initiative which restores Title IV Aid eligibility to students who defaulted on federal loans prior to the start of the pandemic (March 13, 2020). You can find an overview of the program here.

Through this program, borrowers who are currently in default on eligible loans will qualify to borrow new loans. Once new loans disburse, the defaulted loans will be transferred to a non-default servicer and the default status will be removed.

Who Qualifies?

Students who defaulted on Title IV loans in any of the programs below, prior to March 13, 2020.

• William D Ford Federal Direct Loan Program
• Federal Family Education Loan (FFEL) Program including Federal Insured Student Loans (FISL)
• Federal Perkins Loans that are serviced by ED’s Debt Management and Collections System (DMCS)

How to clear the C-Code

Provide FAS with the following items via Student File Direct:

• 👉 Screenshot of the loan detail in NSLDS showing the Default Date (more detailed instructions on NSLDS below)

  • For Direct Loans, the default date is the most recent “Start” date for transfer of the loan to DMCS as shown under “Guaranty Agency/Lender/Servicer Agent History” in the “Loan Detail” section.
  • For FFEL Program loans, the default date is the most recent “Insurance Claim Payment” date with a “Reason Code” of DF or DU shown under “Claim Details for Loan” in the “Loan Detail” section.
  • For Perkins Loans, the default date is the most recent “Start” date for transfer of the loan to DMCS as shown under “Guaranty Agency/Lender/Servicer Agent History” in the “Loan Detail” section.

• 👉Signed/dated statement from student with the following acknowledgment:

  • “I, [full name], understand that I am eligible for Title IV aid as a result of the Fresh Start initiative. As a Fresh Start-eligible borrower, I understand that, by accepting Title IV HEA federal student aid during the Fresh Start period, I am agreeing to have my defaulted loans transferred to a new loan servicer – the company that will manage my loan – which will result in continued Title IV, HEA federal student aid eligibility beyond the Fresh Start period. I understand that this transfer may not occur immediately and that I can contact the holder(s) of my defaulted loan(s) to request transfer sooner.”

👉In NSLDS do the following:

1. Pull up the student using Search Aid Recipient
2. In the Total Outstanding Balance section, click View Loans
3. Click View Loan Details for the applicable loans
4. Scroll down until you see a header that says Loan Holder History
5. For Direct Loans, you are looking for the start date on the line that shows the Loan Holder as Debt Management and Collections System
6. Take a screenshot of this information. Be sure to include the Aid Recipient Information at the top of the page. You can paste this screenshot into a Word Doc and then print that to PDF for upload into Student File Direct.

Please feel free to reach out to the Compliance Team or C Code Team with any questions.