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If you miss a student loan payment, you’re not alone: More than 3 million borrowers were at least one month behind, or “delinquent,” on their federal Direct Loans as of December 2018, according to Federal Student Aid.
Though delinquency is common, that doesn’t mean you’re not penalized for it. Credit damage and late fees are the main consequences of missed payments — but if you fail to catch up, wage and tax refund garnishment can arrive once your loans enter default.
Don’t wait to take action once you’ve fallen behind. Here’s what happens if you miss a student loan payment, as well as the best ways to avoid future late payments.
Consequences of missing student loan payments
If your federal student loan payments are past due, here’s what you can expect to happen and when:
After 30 days. Your servicer can begin charging you up to 6% of your missed payment amount as a late fee. For example, every time you skip a $300 payment, you could be hit with an $18 fee.
After 90 days. Your servicer usually will report your late payments to the credit bureaus. Late payments will stay on your credit report for seven years. This can lower a credit score by as much as 100 points — making it harder for you to open a credit card, rent an apartment or even get a cell phone plan.
Private loans have many of the same consequences for missed payments, but they’re not standardized like federal loans. For example, a lender’s late fee could be a percentage of your payment or a flat fee, like $25.
Private lenders may report late payments after 30 days, and default happens sooner for private loans — often after 120 days — further damaging your credit. And while private lenders can’t take your tax refunds to collect on defaulted student loans, they can sue you to gain additional collection power, including garnishing your wages.
How to avoid late student loan payments
Missing one student loan payment isn’t disastrous, but you’ll want to pay the past-due amount before the consequences ramp up. The best way to get back on track will depend on why you fell behind in the first place:
Contact your lender or servicer once you’ve identified the best solution. If this was your first time missing payments, ask to waive any late fees. They may give you a break, especially if you have a plan to avoid additional late student loan payments.