Student Loans: Biden To Deliver ‘Fresh Start’ To 7.5M Borrowers

Facts

• According to documents obtained by the Washington Post, the Biden Administration has created a plan to take 7.5M Americans in default on their federal student loans back into good standing, restore their eligibility for financial aid and remove the incident from their credit history.¹
• Student loan default happens when a borrower misses at least 270 days of student loan payments.²
• The released documents provide details on the 'Fresh Start' initiative, which was announced in April by the Education Department. It's a one-year program that would see eligible students have their defaults deleted.³
• During this period, the borrowers wouldn't have their wages, tax refunds, or Social Security checks garnished. To participate, borrowers would need to contact the U.S. Department of Education's Default Resolution Group.⁴
• These details come two weeks before the pause on student loan payments, which has seen more than 41M Americans not have to make payments on their federal student loans since COVID began, is scheduled to end.¹
• The Education Dept. is reportedly planning to implement the program before the fall semester.¹

Sources: ¹Washington Post, ²NewsTimes.ng, ³Higher Ed Dive and ⁴Forbes.

Narratives

• Democratic narrative, as provided by Wealth Management. As the pause on student loan payments is nearing its end, the many students who would otherwise be at risk of falling behind on their payments now have the 'Fresh Initiative' to fall back on and emerge with a clean slate. This program will help borrowers dramatically.
• Republican narrative, as provided by Republicans. While the 'Fresh Start' initiative's professed purpose is to help those who are deep in student debt, it actually risks adding to the problem as it would allow borrowers the opportunity to take on more loans, leaving them much worse off than they already are. This is a dangerous decision that will ultimately see taxpayers foot the bill.