Education and Treasury Departments Launch Defaulted Loans Support Center: Borrowers Can Apply Online to Rehabilitate or Consolidate Loans
The U.S. Department of Education (ED) and the U.S. Department of the Treasury announced the launch of the Defaulted Loans Support Center, a new online portal at StudentAid.gov that gives Americans with defaulted federal student loans a simpler way to understand the consequences of default, compare paths out of default, and apply online to rehabilitate or consolidate their loans. The departments said the digital process replaces a paper-based approach in place for decades: borrowers can complete a rehabilitation application online, upload documents, review an estimated payment, electronically sign their agreement and track their progress, and can also apply online to consolidate and access a temporary 1% interest rate reduction by enrolling in auto pay.
"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 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." Treasury Secretary Scott Bessent said the center is an early achievement of the ED-Treasury Federal Student Assistance Partnership, aimed at restoring fiscal responsibility to the nation's $1.7 trillion federal student loan portfolio and giving defaulted borrowers a clearer path back to repayment.
According to the departments, more than 5 million borrowers have been in default for more than six years and an additional 5 million went into default in less than a year, damaging their credit scores and limiting future financial opportunities. In fewer than six months since its official launch, the partnership has delivered a 69 percent increase in approved applications for loan rehabilitation, and consolidations out of default have increased by 95 percent after a technical issue affecting consolidation was corrected.
Early feedback from the portal's beta test showed 89 percent of borrowers found the application 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 departments said the partnership will continue modernizing default resolution, improving borrower communications and strengthening operational accountability.
Published by GSM · USA (original Chinese edition)
Photo: 美国教育部（ED）总部 Lyndon Baines Johnson 大楼（资料图）。照片：Carol M. Highsmith 摄，公共领域，经维基共享资源。 / File photo: the Lyndon Baines Johnson Department of Education Building in Washington, D.C. Photo by Carol M. Highsmith, public domain, via Wikimedia Commons.
