The U.S. Department of the Treasury and Department of Education launched a new online portal to help borrowers with defaulted federal student loans navigate repayment options.
The Defaulted Loans Support Center, available at StudentAid.gov, replaces decades-old paper-based and fax-based processes with a streamlined digital system. Borrowers can now apply online for loan rehabilitation or consolidation, make payments on defaulted loans, and review repayment plans and loan-discharge options without leaving the portal.
"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," the departments said.
Features include uploading documents electronically, electronically signing agreements, and tracking progress. Borrowers who consolidate their loans can access a temporary 1 percent interest rate reduction by enrolling in automatic payment.
Early user feedback indicates strong adoption. According to the departments, 89 percent of early users reported 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 portal launch is part of the Treasury-Education Federal Student Assistance Partnership. More than 5 million borrowers have been in default for more than six years, and an additional 5 million borrowers entered default in less than a year, according to the departments.