India, Aug. 9 -- The US government is moving ahead with a major change to how defaulted student loans are managed. The Treasury Department is preparing to take over the management of the federal government's defaulted student-loan portfolio from the Education Department.

The Treasury released new plans on Friday for managing the loans. The plans focus on changing how borrowers who have stopped paying their federal student loans can deal with their debt and return to good standing.

A key part of the plan is a new "Default Resolution Hub." The Treasury plans to create this centralized system as a place where borrowers in default can understand their situation and plan the steps they need to take to get their loans back into good standing,...