Missing payments on your student loans has serious consequences, from damaging your credit, to wage & tax refund garnishment, to loss of aid eligibility. Additionally, student loans are typically not discharged through bankruptcy – they will be with you for life, so it is well worth it to handle them responsibly!
If you have missed one or more of your student loan payments, you may be considered delinquent or in default. Read on to learn more about the two, and what you can do to get back on track.
You are considered delinquent from the first day you miss a payment until 270 consecutive days of non-payment. At 90 days late, this non-payment information will be reported to the credit bureaus. Since this will negatively affect your credit score, you may have trouble renting an aparment, your credit card interest rates can go up, or you may be denied for a cell phone.
Non-payment for more than 270 days means you are now considered in default. The consequences here can wreak havoc for years to come; wage garnishment, ineligible for future financial aid, inability to obtain professional licenses, garnishment of tax refunds, and inability to collect lottery winnings — all of these can happen when you default!
If you have not yet missed any payments but think that you might, contact your loan servicer IN ADVANCE. They can offer you options to reduce your payment, or even postpone payments via deferment or forbearance. Being proactive is the best way to ensure you don’t do any damage to your credit.
If you have already missed payments, again, contact your loan servicer. They can help you explore those other options. For instance, did you know that there are repayment plans out there that are based on what you earn, rather than what you owe?
If you have already defaulted, you can still recover! Defaulted student loans can be rehabilitated, repaid, or consolidated to return them to good standing. Never give up on this – repaying your student loans is not only good for your credit and will allow you future financial freedom, it is also your responsibility as a borrower and good citizen.
Federal guide to default (recommended that you start here first)
Default Resolution Hotline
Loan Cancellation/Discharge Options