On Tuesday, the U.S. Department of Education announced that it will expand its pause on federal student loans to defaulted loans in the Federal Family Education Loan (FFEL) Program. This relief will be retroactively applied from March 13, 2020, the start of the pandemic.
The FFEL program allows private lenders, insured by guaranty agencies, to make federal student loans, reinsured by the federal government. Now, the department of education will apply its 0% interest rate and freeze on loan collections to 1.4 million borrowers who defaulted on privately-held FFEL program loans. For loans that went into default during the COVID-19 crisis, the record of the default will also be removed.
“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,” said Education Secretary Dr. Miguel Cardona 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 pause on federal student loans extends through Sept. 30, 2021.