The federal CARES Act helped folks with their federal student loans by putting Direct Loans into forbearance and holding off on collecting defaulted FFEL loans. But all of that ends on December 31, 2022. Payments will have to resume on January 1, 2023, and the government will resume collections of defaulted FFEL loans. Borrowers will have to do something this fall.

But those with defaulted loans are in luck . . .

A Fresh Start for Defaulted Federal Student Loans

Starting on January 1, 2023, anyone with a defaulted federal loans, whether Direct or FFEL, can get out of default without having to go through a 9 to 10 month default rehabilitation program, or consolidate the loans, they just have to fill out a form. This applies to:

  • Defaulted Direct Loans
  • Defaulted FFEL Loans
  • Defaulted Perkins loans that were taken back from the school by the Department of Education.

Unfortunately, it does not apply to:

  • Defaulted Perkins loans still held by the school
  • Defaulted Health Education Assistance Loan Program loans
  • Direct Loans that defaulted after December 31, 2022
  • FFEL Loans that defaulted after December 31, 2022
  • Defaulted student loans in litigation (the Department of Education is suing you)

Bear in mind that if your FFEL loans defaulted during the pandemic, will be automatically taken out of default. But you still need to get into an affordable repayment plan before you default again!

What Do You Have to Do?

Without you having to do anything, later this year the Department of Education will begin reporting your defaulted loan(s) as “current” rather than “in collections” to credit reporting agencies. At that point, you’ll get an opportunity to get out of default.

How is that done? Easy! You just have to file an application for an Income Driven Repayment Plan, which will help you keep your fresh start by having the payments track with your income (with a $0 payment if you're unemployed) and thus be affordable!

Don't Want to Do It Yourself?

Need help? No problem! Put an experienced student loan lawyer to work for you! Just click on this link to schedule an initial, free, no obligation call to discuss the details. Don't wait to start putting your mind at ease and starting 2023 with a brighter future!

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Steven J. Richardson
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Bankruptcy, Collections, Student Loan, DUI and Traffic Court attorney in Woodbury, NJ.