The Education Department (ED) is halting interest and debt collection on about 1.14 million defaulted loans in the Federal Family Education Loan Program (FFELP).

“At a time when many student loan borrowers have faced economic uncertainty, we’re ensuring that relief already provided to borrowers of loans held by the Department is available to more borrowers who need the same help so they can focus on meeting their basic needs,” Education Secretary Miguel Cardona said in a statement. “Our goal is to enable these borrowers who are struggling in default to get the same protections previously made available to tens of millions of other borrowers to help weather the uncertainty of the pandemic.”

The 0% interest rate and pause on collections will affect 1.14 million borrowers who have defaulted on privately-held FFELP loans (also known as FFEL loans). The action is also retroactive to March 13, 2020, meaning that borrowers who had had their wages garnished, tax refunds seized, or have made payments since then would be able to get a refund. Furthermore, FFELP loans that went into default since March 13, 2020, will be returned to good standing and ED will also request credit bureaus to remove records of the defaults.

All of the roughly 5 million borrowers holding about $135 billion in debt from privately-held FFELP loans were left out of federal protections amid the coronavirus pandemic.

"Today’s announcement will help some borrowers who had been ignored by Washington, even as the pandemic grew and the economy collapsed," Seth Frotman of the Student Borrower Protection Center, one of the groups calling on ED to expand the moratorium, said in a statement. "Unfortunately, this action is incomplete — it does nothing for the more than 5 million commercial FFEL borrowers who are not in default."

Asked if the pause would be expanded to all FFELP borrowers, a senior ED official told reporters: "We're still looking at what options there are." However, the official added, the process is "little bit more complicated" for extending the moratorium to all FFELP loans because the government has "already made a payment to the lender" on defaulted FFELP loans "so we've already essentially acquired the debt" — whereas the loans that are not in default are still "held by a private entity."

Borrowers who have defaulted on federally-backed student loans are already benefitting from a payment pause ordered by former President Donald Trump in March 2020 and extended by President Joe Biden in January 2021.