May 27, 2024





The U.S. Department of Education has recently implemented two beneficial programs for many borrowers: Fresh Start and One Time Adjustment. In addition, there is a new Income-Driven Repayment plan available called SAVE.


The Fresh Start program assists borrowers with student loans in default status. The program applies to both direct loans and FFELP loans that fell into default prior to the COVID-19 student loan payment pause. Borrowers with loans in this status may contact their servicers or the U.S. Department of Education’s Default Resolution Group (if that is where the loans have been placed) to request participation in the Fresh Start program. These loans will be returned to good standing.

FFELP loans that fell into default during the COVID-19 forbearance period will transfer to the U.S. Department of Education in good standing. No action on the part of the borrower is required. (REMINDER: Direct Loans did not go into default during the COVID-19 payment pause because borrowers were not required to pay.)

Borrowers will be contacted by their loan servicers to arrange resumed payments.


Depending on the types of loans, borrowers on income-driven repayment plans were always eligible for forgiveness of any remaining balance after making payments for 20 or 25 years (in the case of Public Service Loan Forgiveness, after making 120 payments).

Designed to redress errors in calculation and excessive periods spent in forbearance, this plan is much like the waiver period. The waiver period relaxed the Income-Driven Repayment (IDR) plan forgiveness and the Public Service Loan Forgiveness rules. In addition, the one-time adjustment has opened additional paths for borrowers to benefit from IDR forgiveness if they have not paid pursuant to an IDR in the past. The one-time adjustment applies to borrowers with direct loans, FFELP loans, and Parent Plus loans. Borrowers with FFELP loans will need to consolidate to a direct loan.

The adjustment will credit any and all time spent in repayment of direct loans, Parent Plus loans, and FFELP loans toward forgiveness regardless of the type of repayment plan a borrower was on. Borrowers who select an Income Driven Repayment plan when payment resumes will be reviewed for the adjustment whether or not they were on an IDR in the past. Additionally, the adjustment will credit excessive amounts of time spent in forbearance as qualifying payments toward forgiveness. (There are additional credit categories.)


The SAVE repayment plan is the new income-driven repayment plan, which will qualify for IDR forgiveness and for the public service loan forgiveness program. The improved rate of savings is realized by subtracting and exempting a higher percentage of a borrower’s gross income and by reducing the percentage of the discretionary income accessed for payment. Borrowers currently on REPAYE will be switched to SAVE automatically. Those on other IDR plans should speak with their loan servicer about switching.

There are a number of items to take into consideration prior to consolidating one’s loans. DC 37 members eligible for the MELS benefit and their eligible family members are encouraged to contact MELS to speak with an attorney for information and assistance. To open an inquiry, please call the MELS Screening and Intake Unit at (212) 815-1111.


MELS will hold a Student Loan Debt Webinar on Wednesday, October 18, from 6 to 7:30 p.m.

During this webinar, we will discuss:

  • Fresh Start: Bringing Student Loans in Default Current Without Penalty
  • One-Time Adjustment: Fast-tracking the Path to Income Driven and Public Service Loan Forgiveness for Eligible Borrowers
  • The SAVE Repayment Plan: Eligibility and How it Works

To register, please click HERE.

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