A First Look at Student Loan Borrowers Exiting Default via the Fresh Start Program - An Analysis Using National Credit Panel Data

Oct 15, 2026

Uploaded by Bintang

First look analysis using national credit panel data examines outcomes for a segment of federal student loan borrowers who participated in the Fresh Start program. Fresh Start temporarily removed student loan defaults from credit reporting and created a path back to good standing. Findings include roughly 15% exiting default by August 2025 after defaulting just before the pandemic, while about 52% of opt-in Fresh Start borrowers who entered active repayment became at least 90 days delinquent by that time.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages13

Reading Time33 min

AccessFree to download

The Fresh Start Program

Data and Methods

Sample construction

Identification strategy

A First Look at Student Loan Borrowers Exiting Default via the Fresh Start Program An Analysis Using National Credit Panel Data Kristin Blagg May 2026 In this analysis, I use credit data to provide a first look at outcomes for a segment of borrowers who appear to have participated in the Fresh Start program, which temporarily removed student loan defaults from credit reporting and allowed borrowers an opportunity to return their loans to good standing. My results suggest the following: ◼ About 15 percent of borrowers who defaulted just before the pandemic appear to have opted in to Fresh Start or otherwise returned their student loans to good standing by August 2025. ◼ About 52 percent of “opt in” Fresh Start borrowers who defaulted just before the pandemic and were in active loan repayment were at least 90 days delinquent by August 2025. This rate is higher than the 28 percent delinquency rate for all borrowers in active repayment in the same period. ◼ Borrowers whose loans were automatically returned to default on their credit record by August 2025 experienced an average credit score decrease of about 31 points and an average balance increase of about 5 percent. My results suggest that this program provided temporary credit score improvements for mostrecent defaulters and provided an opportunity to reenter repayment for a small share of defaulted borrowers. Some borrowers who defaulted shortly before the pandemic have been able to keep their loans in good standing through repayment or deferment of payment (e.g., because they are enrolled in school). But a substantial share of borrowers who actively took up Fresh Start and entered repayment appear to be returning to delinquency and possible default, with associated negative credit score outcomes. As the US Department of Education continues to pause involuntary collections on defaulted loans, evidence from the Fresh Start program could support the identification of policy changes that would improve collection and repayment outcomes for defaulted borrowers. The Fresh Start Program The Biden administration initiated the Fresh Start program to help federal student loan borrowers exit default without the standard rehabilitation process (nine on-time voluntary monthly payments) or the consolidation process (an agreement to repay under an income-driven repayment plan or to make three full on-time monthly payments). The ability to opt in to Fresh Start was offered to most federal loan borrowers in default starting in spring 2022 (table 1). In winter 2022, the Department of Education took a second step, providing an automatic benefit. Most federal student loan borrowers with creditreportable defaulted loans were automatically reported to credit agencies as “current,” regardless of whether the borrower opted in to the Fresh Start plan.1 TABLE 1 Two FreshStart Experiences Fresh Start activity Borrower action Benefits Dates available | “Opt-in” | Request loans be returned to | Loans taken out of | Spring 2022 through fall | | --- | --- | --- | --- | | Fresh Start | good standing or apply for new federal financial aid | default, in repayment ordeferment status | 2024 | | “Automatic” Fresh Start | None | Loan no longer reported to credit bureaus as being in default | Winter 2022 through fall 2024 | Opting in to Fresh Start provided several benefits for borrowers. It restored eligibility for federal student aid (grants and loans), protected borrowers from collections actions during the first year after the student loan payment pause, and did not affect future rehabilitation eligibility for borrowers who rehabilitated their loans during the payment pause, should they redefault (FSA 2024). Data and Methods To look at credit reporting for borrowers who are subject to Fresh Start, I use a random 2 percent national sample of consumers with a credit record from one of the three major credit bureaus. I initially restrict my sample to all student loan borr

FAQs

What does the Fresh Start program do for borrowers in default?

It temporarily removed student loan defaults from credit reporting and provided an opportunity to return loans to good standing. It also helped borrowers exit default without the standard rehabilitation or consolidation process.

What outcomes were observed for borrowers who defaulted just before the pandemic?

About 15% of those borrowers appeared to have opted in to Fresh Start or otherwise returned to good standing by August 2025. However, many opt-in borrowers later became delinquent again after entering repayment.

How does the analysis identify which borrowers were affected by Fresh Start?

The analysis uses a random 2% national sample from major credit bureaus and focuses on borrowers whose defaults fall within seven years by August 2025. It then assumes recipients based on credit reporting patterns in collections and later default status.

Oct 15, 2026

Uploaded by Bintang