If you miss a payment or are late with a payment, your loan becomes delinquent and you may face late fees. If you’re having trouble making payments, contact your lender or loan servicer immediately. Ask about alternatives you may have for changing the date your payments are due, switching to a different payment plan, or being granted deferment or forbearance. Information from the federal Consumer Financial Protection Bureau for students falling behind on their loan payments.
If you fail to make payments for 270 days in a row, your federal student loan goes into default. Defaulting on a federal student loan has serious consequences that can negatively impact your financial future. If you go into default, you:
- Are required to repay the entire unpaid amount of your loan immediately
- May be sued by the federal government, which may take all or part of your federal and state tax refunds
- May have your wages garnished by the federal government, so that your employer is required to send part of your salary to pay off your loans
- May be required to pay a reasonable amount of collection costs and fees
- Will be reported to credit bureaus, which will hurt your credit score
- May be denied a professional license
- Will lose your eligibility for federal student aid as well as help under most other federal benefit programs
- Will lose your eligibility for loan deferments
- May have your Social Security benefits garnished
Never ignore notices from your loan servicer or lender. If you experience any problems repaying your student loan, don’t wait until you’ve missed a payment to take action. Contact your loan servicer immediately to discuss your repayment options.
Steps to Avoid Delinquency and Default
- Understand your borrowing
- Know the type of loan you are borrowing including the fees and interest associated with the loan.
- Read the promissory note (MPN). The promissory note is a legally binding document. By signing the MPN, you are agreeing to repay the loan according to the terms in the MPN. All loans received must be repaid even if you do not graduate or find a job in your field of study.
- Manage your borrowing
- Track your loans
- Determine your loan servicer
- Set-up an account with your loan servicer to track your loans
- Keep records of your loans that include:
- Correspondences from servicers
- Principle amount
- Interest rate
- Servicer contact information
- Requests for payment plan changes, deferments or forbearances
- Documentation submitted to your loan servicer
- Other pertinent loan information
- Stay in touch with your loan servicer
- Contact your loan servicer when any of the following occur:
- Your demographic information changes
- You graduate, transfer, withdraw or drop below half-time enrollment
- You need help making your monthly payments