U.S. Department of the Treasury and U.S. Department of Education Launch New Defaulted Loans Support Center
New Online Portal Provides Streamlined Options for Millions of Borrowers to Address Defaulted Loans and Return to Repayment
WASHINGTON – The U.S. Department of the Treasury (Treasury) and the U.S. Department of Education (ED) announced the launch of the Defaulted Loans Support Center, a new online portal that gives Americans with defaulted federal student loans a simpler way to understand their options, address default, and return to repayment. The launch of this portal is part of the Trump Administration’s commitment to improve the administration of federal student aid programs as part of the Treasury-ED Federal Student Assistance Partnership.
“Under President Trump, Treasury and the Department of Education are restoring fiscal responsibility to our nation’s $1.7 trillion federal student loan portfolio,” said Treasury Secretary Scott Bessent. “The new Defaulted Loans Support Center marks an important early achievement of the Treasury-ED Federal Student Assistance Partnership, bringing Treasury’s unique financial and operational expertise to the program, providing defaulted borrowers a clearer path back to repayment, and building a more efficient and accountable system that better serves borrowers and taxpayers.”
“This landmark announcement is a historic step toward breaking up the federal education bureaucracy while streamlining critical resources for student loan borrowers in default,” said U.S. Secretary of Education Linda McMahon. “The Department of Education was never intended to serve as the fifth largest bank in America, and that’s exactly why we partnered with the Treasury Department to improve the administration of federal student aid programs that millions of American students, families, and borrowers rely on. This is truly proof of concept for the Federal Student Assistance Partnership, bridging technology and expertise to build a better borrowing experience.”
The launch of the Defaulted Loans Support Center gives borrowers with defaulted federal student loans a simple, streamlined way to understand the consequences of default and apply online to either rehabilitate or consolidate their loans. This modern, digital process replaces the arduous paper-based approach that has been in place for decades, making it faster and easier for borrowers to move from default back into repayment. By providing borrowers with quicker access to repayment options, the new portal can help improve their financial circumstances and restore access to benefits that may have been unavailable as a result of default.
The launch is an early milestone of the Treasury-ED Federal Student Assistance Partnership, which continues to mitigate the fallout and cost to taxpayers from the Biden Administration’s mismanagement of the federal student loan portfolio and facilitate the return of defaulted borrowers to repayment.
DELIVERING BETTER OUTCOMES FOR BORROWERS AND TAXPAYERS
During its four years in office, the Biden Administration intentionally masked the number of borrowers entering default through its so-called “Fresh Start” and failed on-ramp programs. It also terminated all contracts with private vendors to assist with collecting defaulted loans, leaving ED with limited infrastructure and capacity to assist the millions of borrowers in default. As a result, more than 5 million borrowers have languished in default for more than six years and an additional 5 million borrowers went into default in less than a year, damaging their credit scores and limiting their access to future financial opportunities.
Now, in fewer than six months since its official launch, the Trump Administration’s Treasury-ED Federal Student Assistance Partnership has delivered a 69 percent increase in approved applications for loan rehabilitation. And after the correction of a Biden-era technical issue, which made it difficult for defaulted borrowers to consolidate their loans, consolidations out of default have increased by 95 percent.
HELPING BORROWERS RETURN TO REPAYMENT
The new Defaulted Loans Support Center replaces outdated websites and burdensome mail- and fax-based processes with a streamlined online portal at StudentAid.gov.
Now, defaulted borrowers have a centralized portal to:
- Understand the consequences of default;
- Compare available paths out of default;
- Apply online for loan rehabilitation or consolidation;
- Make a payment on a defaulted loan; and
- Review repayment plans and loan-discharge options.
Borrowers can also complete the loan rehabilitation application online, upload documents, review an estimated payment, electronically sign their agreement, and track progress without leaving StudentAid.gov. Additionally, borrowers can use the portal to apply online to consolidate and then access the temporary 1% interest rate reduction by enrolling in auto pay.
Early user feedback indicates that borrowers find the new process easier to use:
- 89 percent reported that the application was easy to complete;
- 86 percent said they understood what to do next; and
- 84 percent said the process took a reasonable amount of time.
The Treasury-ED Federal Student Assistance Partnership continues to modernize default resolution, improve borrower communications, strengthen operational accountability, and build a federal student loan program that produces better outcomes for borrowers and taxpayers.
Borrowers can access the Defaulted Loans Support Center at: https://studentaid.gov/default-support/.
A fact sheet on the Treasury-ED Federal Student Assistance Partnership is available here.
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