![How to Avoid Overdraft Fees [8 Ways]](https://i0.wp.com/qualifylearner.com/wp-content/uploads/2025/05/How-to-Avoid-Overdraft-Fees-8-Ways-150x150.jpg "How to Avoid Overdraft Fees [8 Ways]")
![[Q&A] What Is Student Loan Default? What It Means and What to Do About It](https://i0.wp.com/qualifylearner.com/wp-content/uploads/2025/04/Q-A-What-Is-Student-Loan-Default-What-It-Means-and-What-to-Do-About-It.jpg "[Q&A] What Is Student Loan Default? What It Means and What to Do About It")
Student loan default happens when you fail to repay your loan as agreed, typically after missing several months of payments. Defaulting can trigger serious consequences, including damage to your credit score, wage garnishment, and loss of access to repayment plans or forgiveness programs.
Default timelines vary by loan type. Federal student loans usually default after 270 days of missed payments. Private loans can default even sooner, often after 90 days. If you’re struggling to keep up or worried about falling behind, it’s important to act early—this guide will walk you through what default means, how it happens, and what to do next.
🎓 In the News: On May 5, 2025 the U.S. Department of Education will resume collecting payments on defaulted student loans, and all affected borrowers will receive an outreach email prior to this date, per a recent press release.
Table of Contents
What does student loan default mean?
When you default on a student loan, you’ve failed to meet the repayment terms outlined in your promissory note—the legal agreement you signed when you borrowed the money. Whether you have a federal or private loan, this note outlines your obligation to repay the loan according to a set schedule.
Once your loan enters default, your entire balance may become due immediately. You could face additional interest, late fees, and collection costs, along with long-term consequences like credit damage, wage garnishment, and loss of access to repayment options or future financial aid.
If I missed a payment, am I in student loan default?
You won’t go into default if you miss one payment. But it’s important to know what happens next if you can’t make a payment soon. Here is a timeline:
⌛ 1 day after a missed payment
When you’re one day late on your student loan payments, your loans are considered delinquent (not in default). At this point, you still have many options.
If you can’t make the payment, contact your servicer or private loan lender and ask whether it’s possible to go into deferment or forbearance. If you have federal student loans, you may be able to change your repayment plan so the payments are manageable.
⌛ 30 – 90 days after a missed payment
- When your student loan is more than 30 days late, private lenders typically report late payments to the credit bureaus, which can hurt your credit score.
- If you have federal student loans, the government reports your late payment at the 90-day mark.
According to the Consumer Financial Protection Bureau, most private lenders will put your loan in default after three months of non-payment. Depending on your lender, you could still avoid default at this point if you contact the lender and ask about your options.
⌛ 90 – 180 days private loans in default
It varies by lender, but by the time you’re 90 to 180 days late, most private lenders will put your loan in default. Collections agencies might start calling you frequently.
⌛ 270 days after a missed payment
After you’re 270 days late on your federal student loan payments, your loans are in default. At this point, you’ll be ineligible for many federal student loan protections as well as federal student loan forgiveness. However, there are numerous ways to rehabilitate your loans and get back on track.
⌛ After loans are in default
Once your student loans are in default, the federal government can garnish your wages and seize parts of your tax refund. Private lenders can sue for the right to collect on the loan. Though it might seem dismal, you can still enter federal programs to rehabilitate your loans or offer to settle with private lenders.
What happens when a student loan goes into default?
When you’re in default, it can hurt your credit score and make it difficult to qualify for credit in the future. It’s also possible your lender will sue you, garnish your wages, and call you often until you make a payment.
If you default on federal student loans, you’ll lose the ability to apply for a new repayment plan or qualify for loan forgiveness. You can’t qualify for forbearance if you’ve already defaulted. If you get a tax refund or qualify for Social Security benefits, the government can garnish your wages. Private lenders can garnish wages, too, but they’ll need to sue first.
Defaulting on student loans can have long-term consequences:
- Your credit score and the fact that your loans are in default may make it difficult to rent an apartment or purchase a home.
- Defaulted loans may be sold to collection agencies, which can sue you and add attorney fees to the debt.
- In some states, defaulting on student loans can lead to the suspension or loss of professional licenses.
- Defaulting is reported to credit bureaus, damaging your credit score. This may affect your ability to get credit cards, car loans, mortgages, or other loans.
How do I know if my student loans are in default?
According to a Pew Charitable Trust survey, one-third of federal student loan borrowers defaulted on their student loans over the past 20 years. So if you think your loans are in default, you’re not alone. Here are a few ways you can find out whether you are:
- You’ll receive a letter or email from your student loan servicer or private lender letting you know you’re in default.
- You might get calls from a debt collector.
- Your place of employment could notify you of wage garnishment due to your loans being in default.
- You might not get your full tax refund if the government seizes a part of it for your repayment.
- You could notice your credit score dropped, and there’s an adverse event on your credit report.
- Your lender may file suit against you.
Federal loans vs. private loans
If you have federal student loans, you can find out the status of your loans by logging on to the Federal Student Aid (FSA) website. You can also call your servicer to ask whether your student loans are in default. If the federal government transfers your account to the in-house collections division, you might get a notification that you have a new servicer.
If you have private student loans, contact your lender. You can also pull your credit report for free from AnnualCreditReport to see whether you have accounts in collections.
What should I do if I’m in danger of defaulting on my student loans?
If you’ve missed some of your student loan payments but aren’t yet officially in default, you have options. Here are some next steps to consider:
Call your student loan servicer or lender
⭐ Best for: Anyone who will miss a payment or who is already behind on payments
Although it might feel embarrassing, calling your student loan servicer or lender is the first step to take when you’re behind on your payments. It’s never fun to admit when you’re having a hard time, but servicers are there to help borrowers manage their loans, no matter the circumstances. Your servicer will tell you about programs or strategies you can use to get current.
A student loan servicer is typically an organization that manages federal student loans. See our complete list here. If you have private student loans, your lender may be your servicer, or it may use a third-party servicer. Start my contacting the lender you obtained the loan from to discuss payment issues.
Put your loans in forbearance or deferment
⭐ Best for: Temporary financial hardship
If you’re experiencing financial difficulty and expect it to be a short-term issue, ask your servicer whether you qualify for deferment or forbearance. When a servicer approves your application for forbearance, it permits you to miss payments for a set time. Interest still accrues while your loans are paused.
Deferment is different because interest doesn’t accrue, but you must meet specific requirements. For example, if you have federal student loans, you can put your loans in deferment if you are deployed with the military or undergoing cancer treatments, among other reasons.
Deferment and forbearance are better options than defaulting on your loans because your servicer is aware of your financial hardship and grants you time off from making payments without negative marks on your credit report. Many private lenders offer forbearance options as well.
Refinance your student loans
⭐ Best for: Private student loan borrowers or federal loan borrowers willing to give up federal protections
Refinancing your student loans won’t stop your payments, but it can help you lengthen your term and lower your interest rate, which can reduce your monthly payments. The downside of lengthening your term is that you’ll stay in debt longer. However, if lowering your payment can help you avoid default, it’s better to refinance.
You can refinance federal student loans into private loans, but there are downsides, like losing federal protections, including flexible repayment plans. If you have bad credit from missing payments, some private lenders cater to borrowers with low credit. One such lender is Funding U.
Change repayment plans or consolidate
⭐ Best for: Federal loan borrowers
If you have federal student loans, there are several ways to change the amount of your monthly payments. As of March 2025, you can once again apply online for an income-driven repayment plan after a temporary pause due to legal issues related to the SAVE plan.
You can also consolidate your loans, which rolls two or more loans into one with a single monthly payment. This can help you manage your cash flow and expenses better, but you can lose previous payment credits that count toward loan forgiveness.
What do I do if my student loans are already in default?
If your student loans are already in default, you still have options. Here are several examples:
Loan rehabilitation
⭐ Best for: Federal loan borrowers who can make 9 payments
Loan rehabilitation is something the government offers to federal student loan borrowers who defaulted on their federal student loans. It’s a way for borrowers to get back on track and prove they’re committed to putting their loans back in good standing. To qualify, you must make nine on-time payments.
A payment is typically 10% to 15% of your income, so it might be less than your previous student loan payments. Once you make nine on-time payments, you will no longer be in default and can apply for deferment, forbearance, or a new repayment plan. The default will be removed from your credit report, but your late payments will stay.
Consolidation
⭐ Best for: Federal loan borrowers who want out of default faster
If you apply for a Direct Consolidation Loan, you only need to make three on-time payments before you’re allowed to consolidate your defaulted loan into a new loan. The catch is that you have to make three full payments (not payments capped at 15% of your income). And any interest you accrued will be added to the loan, which can make your balance higher.
Creditors will still be able to see a history of default on your credit report when you consolidate. If you’re interested in refinancing your defaulted loan instead of consolidating it, few lenders refinance loans currently in default, and some charge origination fees and higher interest rates. Yrefy is one lender that specializes in refinancing defaulted student loans.
Debt settlement
⭐ Best for: Borrowers with private student loans
If you defaulted on private student loans, you can settle your debt for less than you owe. You can negotiate a lower amount yourself by contacting your student loan servicer, working with a debt settlement attorney, or hiring a debt settlement company.
National Debt Relief is our team’s highest-rated debt relief company. It can help clients with some types of private student loan debt. Typically, your student loans must already be in default before lenders will negotiate a lower payment.
FAQ
Can you lose your house if you default on student loans?
Not directly. Student loan lenders can’t foreclose on your home like a mortgage lender could. However, if you default on federal student loans, the government can garnish your wages, seize tax refunds, and even take money from Social Security. Over time, that financial pressure could cause you to fall behind on your mortgage, which might put your home at risk indirectly.
What happens if you never pay off student loans?
If you never pay, your loan will likely go into default. For federal loans, this triggers aggressive collections, including wage garnishment and tax refund offsets. Your credit score will take a hit, and interest and fees will keep piling up, making the debt harder to pay off.
Do unpaid student loans ever go away?
Not usually. Federal student loans don’t have a statute of limitations, which means the government can collect on them indefinitely. Some private loans have limits on how long a lender can sue you, but that doesn’t erase the debt. In rare cases, loans can be discharged due to disability, school closure, or bankruptcy—but that’s hard to qualify for.
Has anyone gone to jail for not paying student loans?
No. You can’t be jailed for failing to repay student loans. However, if you ignore court orders related to the debt—like not showing up for a hearing—you could face legal trouble, but that’s due to contempt of court, not the unpaid loan itself.
How can you get rid of student loans without paying?
Getting rid of student loans without paying them off is difficult, but a few options do exist. You may qualify for loan forgiveness through programs for teachers, public service workers, or those enrolled in income-driven repayment plans. These programs typically require years of qualifying payments and specific employment criteria.
Other discharge options include total and permanent disability, or borrower defense to repayment if your school misled you or engaged in misconduct. In very rare cases, student loans can be discharged in bankruptcy, but it requires proving undue hardship through a challenging legal process.
Can I just ignore my student loans?
You can, but the consequences will snowball. Interest accrues, your credit score drops, and collections can start. For federal loans, wage garnishment and tax refund seizure are likely. Ignoring them won’t make them disappear.
What if I can’t afford my student loan payment?
You have options. Federal loans offer income-driven repayment plans that adjust your payments based on income. You can also apply for deferment or forbearance to pause payments. If you have private loans, contact your lender—some offer temporary hardship assistance.
Will student loans take my taxes in 2025?
If you’re in default on federal student loans, your tax refund could be taken through a process called Treasury Offset. Student loan collections were paused for a while due to COVID relief measures, but full collections are resuming in 2025 unless new policies change this plan.
