If you're eligible for Fresh Start, you can now access federal student aid again. You can apply for federal grants and loans if you want to go back to school. This may help you complete an unfinished degree, possibly making it easier to repay your loans.
If you have student loans in default, you will not be eligible for any new federal financial aid (grants or loans) until you resolve the default (either by making 6 consecutive payments with the Dept of Ed to rehabilitate the loans, pay the loans in full or consolidate the loans, or another method I didn't mention).
Unless you do the governments method of getting out of default like rehabilitation or something they call it, you are ineligible to get any more loans unless they're private loans not federal.
Federal student loans may come off your credit report either seven and a half years after the default or seven years after the loan was transferred to the Department of Education. In both cases, the strikes on your credit report will disappear only if you start to make payments.
"Defaulting on student loans can present an obstacle if you want to go back to school. Student loan default, which occurs after 270 days of missed payments on federal student loans, typically makes you ineligible for federal student aid.
To qualify for the IRS Fresh Start Program in 2025, taxpayers generally need to meet one or more of the following conditions: Owe Back Taxes: Individuals or small businesses with outstanding federal tax debt.
We usually recommend you sign up for an IDR plan if you're getting out of default because future payments will count toward IDR Loan Forgiveness. You can get your loans forgiven after a set number of years on an IDR plan (10–25 years depending on the plan and your total loan debt).
For Written Contracts: Most private student loans are considered written contracts. Under California law, the statute of limitations for a written contract is four years. This means the lender has four years from the date you miss a payment (and breach the contract) to sue you.
Federal regulations state that financial aid for a future semester cannot be used to pay a prior semester balance. Even if you are expecting a refund for spring semester, you need to pay the outstanding prior balance from the prior semester.
The federal government won't take your home because you owe student loan debt. However, if you default and the U.S. Department of Education cannot garnish your wages, offset your tax refund, or take your Social Security Benefits, it may sue you.
If you have outstanding education debt, there are two main ways to handle it to return to school: deferring your loans or refinancing them.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
You lose eligibility for additional federal student aid such as Federal Pell Grants and student loans. The default is reported to credit bureaus, damaging your credit rating and affecting your ability to buy a car or house or to get a credit card. It may take years to reestablish a good credit record.
If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.
Colleges typically do not release transcripts if a student still owes money. So this will probably prohibit you from earning a degree elsewhere. What you may be able to do, however, is to work out a payment plan with your old school which will allow your transcript to be released, even if you haven't paid in full yet.
Default Status and Credit Reports: Defaulted loans don't disappear after 7 years, but the default status may be removed from your credit report, though the debt remains. Loan Discharge Options: Loans may be discharged in cases of death, permanent disability, or school fraud.
At what age do student loans get written off? There is no specific age when students get their loans written off in the United States, but federal undergraduate loans are forgiven after 20 years, and federal graduate school loans are forgiven after 25 years.
Your wages may be garnished. This means your employer may be required to withhold up to 15% of your pay and send it to your loan holder to repay your defaulted loan. Your loan holder can take you to court. You may not be able to buy or sell assets such as real estate.
No. If a student has federal student loans that are in default, they are not eligible to receive additional federal student aid until the default is resolved. The borrower can resolve a default by paying the defaulted loan in full, consolidating the loan, or rehabilitating the loan.
Applying for the IRS Fresh Start program
It's only after filing tax returns that you can go to the IRS gov to get yourself enrolled using the Online Payment Agreement tool. The tool lets you choose your preferred repayment option.
Note: The Fresh Start program ended at 2:59 a.m. Eastern time on Oct. 2, 2024. Learn about other ways to get your loan out of default. It takes 4–6 weeks for most people to have their request processed and be transferred to their new non-default servicer.
There are no specific fees associated with the IRS Fresh Start program itself. However, there may be costs associated with resolving your tax problems and hiring professional services. Tax professionals or tax resolution firms may charge fees for their services.