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Covid-19 Stimulus Package: Direct Loans

What is a Direct Loan?

A Direct Loan means the money was borrowed Directly from the US Education Department (USED). No middleman. The loan will always be held by USED. When in good standing, a servicer helps USED collect by sending bills and offer affordable payment plans and/or forbearance and deferments. When in default, a debt collector helps USED collect through various communications and also helps with wage garnishments and rehabilitation.

Stimulus Help?

Congratulations! Your loans are protected with the Stimulus Package! Here’s how:

  • Interest is reduced to 0%

The rest depends on the status of your loan – good standing or default.

Good Standing/Delinquent

  • Loans are automatically placed into a 6-month forbearance
  • If you’re working towards PSLF, these 6 months count – no payment necessary!
  • If you’re working towards IDR forgiveness, these 6 months count – no payment necessary!


  • All collection activity stops
  • Wage garnishments stop (you must contact your employer to make them stop)
  • Social Security offsets stop – as of March 13, 2020
  • Tax refund offset stops – if it was in process after March 13, 2020, you’ll get your refund. If your refund was taken prior to this date, sorry, you may not get it back.
  • Rehabilitation payments no longer required BUT YOU’LL STILL GET CREDIT for 6-months of payments.
  • No debt collectors calling or sending letters to collect.

If your loan is in default, now is an EXCELLENT time to fix your loan and get it back to good standing. Life will eventually return to normal. Here’s your chance to have your loan start normally too! Want help figuring out the best way to do that? Schedule an appointment.