The student loan payment pause will also reset the accounts of millions of defaulted borrowers.

More than seven million borrowers who have defaulted on their federal student loans will have their loans restored to good standing, the Education Department said on Wednesday — a boon that the Biden administration included in its four-month payment moratorium extension.

About one in five federal borrowers has a loan in default, meaning their payments were at least 270 days, or around nine months, overdue. And once a loan enters default, it can be nearly impossible to get back out again.

“It’s like quicksand,” said Sarah Sattelmeyer, a higher-education project director at New America, a think tank.

Program rules often prevent defaulted borrowers, especially those who have defaulted multiple times, from starting to pay again under the federal loan program’s usual payment plans. Giving those borrowers a fresh start is “a really big deal,” Ms. Sattelmeyer said.

Student loans have been effectively frozen for tens of millions of borrowers since the start of the pandemic. The pause has allowed borrowers to stop making payments, prevented interest from accruing and halted collection efforts. And the federal government previously said that delinquent borrowers — those whose payments, before the pandemic, were a few months overdue — would be made current before the pause ended.

Officials urged delinquent borrowers to use that as an opportunity to get into more manageable payment plans, like those based on their income. But because of their defaulted status, borrowers who are the furthest behind were generally not eligible without meeting other requirements first.

Education Secretary Miguel Cardona said the department would use the extension of the moratorium to “continue our preparations to give borrowers a fresh start and to ensure that all borrowers have access to repayment plans that meet their financial situations and needs.” An Education Department representative said that further details about the treatment of defaulted borrowers would be posted “in the coming weeks” on StudentAid.gov.

But major obstacles loom. For instance, the loan servicers, the vendors hired by the government to collect on its $1.6 trillion in federal student loans, have no idea how this planned clean slate will work.

The Education Department has given its servicers “zero guidance” about the process, said Scott Buchanan, the executive director of the Student Loan Servicing Alliance, a trade group. “I can’t tell you anything about how formerly defaulted borrowers would be treated — or even who might be eligible — because it’s totally unclear.”

He added: “It’s unclear if they even have an actually operational plan about how they will do it or what they even can do under the law.”

Ms. Sattelmeyer said the administration’s planned new date for restarting student loan payments — Aug. 31 — did not give the department, or its contractors, much time to make arrangements.

“There’s a lot of decisions that need to be made over the next couple of months to make sure that borrowers are protected and that this transition supports them,” she said. “We don’t want people to re-enter a payments system that didn’t serve them well the first time around.”