The school must retain this acknowledgment for three years after the end of the award year in which the student last attended the school.

A school's failure to comply with the guidance in this letter may result in a determination that the school has awarded Title IV aid to an ineligible student. Students who are ineligible for any other reason (e.g., failing to meet satisfactory academic progress standards, owing an overpayment on a Title IV grant, or being in default on a Perkins Loan that is held by a school) are not eligible to receive Title IV aid unless the eligibility issue is resolved.

We want to emphasize that the guidance in this DCL applies only when awarding aid to borrowers who are currently ineligible based solely on a prior Title IV loan default, and who qualify to have their eligibility restored through the Fresh Start initiative or in accordance with DCL GEN 21-03. This one-year period is referenced throughout this Dear Colleague Letter (DCL) as the Fresh Start period. Simply put, these borrowers will have at least one year to make payment arrangements before defaulting on their debts and/or being subject to further collections efforts like most other borrowers eligible for the payment pause. This Fresh Start initiative will remain available to previously defaulted borrowers, as identified above, for one year after the end of the COVID-19 pandemic student loan payment pause. These borrowers will also have the chance to enroll in an income driven repayment plan or access other repayment options that suit their needs.

Access to federal student aid can provide a pathway for additional education, which can help these borrowers compete in the job market and ultimately improve their ability to fully repay their loans, among other benefits. Among other features, this initiative, called “Fresh Start,” will enable borrowers with defaulted federal student loans to regain Title IV HEA federal student aid eligibility, including Federal Pell Grants and campus-based aid like Federal Work-Study. Department of Education (Department) announced on April 6, 2022, that it would eliminate the negative effects of default for borrowers who defaulted on their federal student loans prior to the pandemic payment pause.

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