Paying down your student loans can feel like you're throwing money into the abyss. So what happens if you just... don't pay them?
You'll likely tank your credit score. If your loans go unpaid for a long time, you may lose your tax refund and federal benefits, and your employer may even be forced to withhold some of your paycheck.
If you don’t pay your federal student loans
Here’s a quick timeline of what can happen if you don’t pay your federal student loans:
After one day of not paying, your loan becomes delinquent. Your loan account remains delinquent until you repay the past-due amount or make other arrangements, such as deferment, forbearance or changing repayment plans.
After 90 days of not paying, your federal student loan servicer will begin reporting the delinquency to the major national credit reporting agencies — Equifax, TransUnion and Experian. That can knock a lot of points off your credit score — and the higher your initial credit score, the larger this point deduction will be.
After 270 days of not paying, most federal student loans enter default. This means your tax refunds and any federal benefits you receive may be withheld. Your employer may also be required to withhold some of your paycheck. Read more about what happens in default below.
If you don’t pay your private student loans
Consequences of missed payments may vary among private lenders; review your loan contracts for specific details. Generally, here’s what can happen if you don’t pay private student loans:
After one day of not paying, your loan becomes delinquent. You may start facing late fees, which vary by private lender.
After 30 days of not paying, your private lender may begin reporting the delinquency to credit reporting agencies, according to the Consumer Financial Protection Bureau. Missed payments can really harm your score — the higher your score, the bigger hit you’re likely to see.
After 90 days of not paying, private loans begin entering default, the CFPB says. Read more about what happens in default below.
🤓Nerdy Tip
Private student loans taken out by parents and federal parent PLUS loans only impact the credit of the person who took them out. So, only the parent would face consequences for missed payments. However, both student and parent (or other co-signer) are on the hook for co-signed private loans. What does it mean to default on a student loan?
Student loan default means you are in breach of the contract you signed and collection efforts can begin. Default can also damage your credit history with a negative mark that sticks to your record for years from when it was first reported.
Consequences of federal student loan default
- Entire unpaid balance, including accrued interest, becomes due immediately.
- Lose access to temporary payment deferments if you lose your job or face other financial hardships.
- Lose access to income-driven repayment plans, which can lower payments to as little as $0 per month based on your income.
- Lose any credits toward Public Service Loan Forgiveness.
- Can’t receive additional federal student aid if you want to go back to school in the future.
- Wages, Social Security benefits and tax refunds may be garnished or withheld.
- Lower credit score, which impacts your ability to buy a house or car, rent an apartment, take out future loans or get approved for a credit card.
Consequences of private student loan default
- Potentially face collections fees.
- Lower credit score, which impacts your ability to buy a house or car, rent an apartment, take out future loans or get approved for a credit card.
- If someone co-signed your private student loan, their credit score could suffer too.
- Wages could be garnished — but private lenders must first sue you and win a court order before they can do so. They cannot seize tax refunds or Social Security checks.
Private student loan lenders might try to collect your debt directly, or hire a collections agency to go after you. Consequences of default may vary by private lender; review your loan contracts for specific details.
What to do if you’re having payment trouble
Do everything you can to avoid missing payments. If you have federal student loans, contact your servicer to lower or pause payments. This could include:
- Enrolling in an income-driven repayment plan, which sets payments at a portion of your income (it could even be $0 per month if you’re unemployed).
- Applying for a student loan unemployment deferment.
- Applying for a student loan forbearance to pause loans.
If you have private student loans, your lender might offer options such as temporarily reduced payments or a short-term forbearance to pause loans.
Trustworthy organizations also offer student loan help, but watch out for scams. Legitimate groups won't call, text or email you with debt resolution offers. Avoid “debt relief” companies that promise immediate student loan forgiveness. If it sounds too good to be true, it usually is.
Here are some vetted student loan help resources to consider for information, advice or both; they are established organizations with verified histories.
Student loan help resource | Best for |
|---|---|
Advice on repayment plans, forgiveness programs and dispute resolution. | |
Comprehensive information on options for student loan borrowers. | |
Advocacy on behalf of all borrowers to influence policy. | |
Complete financial review for struggling borrowers, which can include advice on student loan options and plans for dealing with other debt. | |
Advice on repayment plans, help with paperwork and budget counseling. | |
Free virtual workshops and one-on-one appointments for struggling borrowers. | |
Information for student loan borrowers and an attorney directory. |
