Federal Student Aid Eligibility for Borrowers with Defaulted Loans — “Fresh Start” Initiative
This Federal initiative is an opportunity for those students currently in default on their Federal student loans to get another chance to receive Federal aid and complete their education. The goals of this initiative are to increase the long-term prepayment success of borrowers with defaulted federal student loans and provide substantial benefits to borrowers over the coming months (up to 1 year after the payment pause ends). Outreach to these borrowers would begin in October 2022 by the Department of Education. Please reference this fact sheet for your questions [pdf].
Students would be eligible for the following aid programs:
- Federal Pell grant
- Federal SEOG (Supplemental Educational Opportunity Grant) grant
- Federal Work Study
- Federal Student loans
Under the “Fresh Start” initiative students would still be considered in default on student loans until they are transferred to a non-default servicer. Until the default status is resolved by working with the loan server, students are not eligible for state scholarships/grants (including Future Ready Iowa Last Dollar Scholarship). Once a student’s information shows no defaulted Federal loans on the National Student Loan Data System (NSLDS), no defaulted Federal loan on the updated Free Application for Federal Student Aid (FAFSA) sent by the Department of Education, or if the institution receives a default clearance letter that does not reference the “Fresh Start” initiative, then that student may qualify for state scholarships/grants.
What does this mean to me as a current or prospective Hawkeye Student?
Beginning August 17, 2022, Hawkeye Community College will review those with defaulted Federal loans on newly uploaded FAFSAs and notify the student if we need any documents from them including a signed acknowledgment. Students that have defaulted Federal loans and whose FAFSA was processed by Hawkeye prior to August 17 can contact our Financial Aid Office to request a review.