Credible takeaways
- Federal loan default typically happens after 270 days of nonpayment; for private student loans, it can happen much sooner.
- The consequences of default are severe, and can include credit damage, wage garnishment, and loss of federal aid eligibility.
- Federal borrowers can get out of default through rehabilitation or consolidation; each has its own pros and cons.
- If you're struggling to make payments, consider an income-driven repayment plan, loan deferment, or refinancing.
Falling behind on student loan payments is more common than you might think. As of April 2025, more than 5 million federal student loan borrowers were in default, according to the U.S. Department of Education.
Defaulting on your loans can lead to serious consequences, including credit damage, wage garnishment, and collection fees. But there are ways to get back on track. In this guide, learn what happens when you default on student loans, and how to recover if it happens to you.
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What does it mean to default on a student loan?
Defaulting on a student loan means you've failed to make payments for an extended period of time. While your loan becomes delinquent as soon as you miss one payment, it doesn't enter default right away.
For federal student loans, default usually happens after 270 days of nonpayment. With private student loans, it can happen much sooner — often after 120 to 180 days — but the exact timeline depends on your lender.
Consequences of defaulting on student loans
Federal student loan default consequences
Defaulting on a federal student loan can trigger serious financial consequences, including:
- Loan acceleration: Your entire loan balance, plus interest, will become due immediately.
- Credit damage: Your lender reports missed payments to the credit bureaus. This can significantly lower your credit score, and the default status stays on your credit report for up to 7 years. This can make it harder to qualify for a mortgage, credit card, or other loans.
- Wage garnishment and federal offsets: The government can garnish your wages and withhold your tax refunds or other federal benefits, including Social Security, to collect on your debt.
- Collection fees: If your loan is sent to a collection agency, you may be charged additional fees that increase your total balance.
- Loss of federal aid and protections: You'll lose access to deferment, forbearance, income-driven repayment plans, and future federal student aid.
- Legal action: Your loan servicer can take you to court, which could result in a judgment against you and added costs like court fees and attorney expenses.
See Also: Federal Student Loan Collections Are Back. Here's What To Do if You're in Default
Private student loan default consequences
Private lenders don't have the same collection powers as the federal government. They can't garnish your wages or seize your tax refund without a court order. But defaulting on a private student loan still carries serious consequences.
Lenders can report the default to the credit bureaus, which can significantly lower your credit score. They can also take legal action against you, and if they win, you may be responsible for court costs and attorney fees.
Good to know
Private student loans have a statute of limitations of usually three to six years, depending on your state. Once it passes, lenders can’t sue you, but they can still try to collect, and the default can continue to hurt your credit.
How to get out of student loan default
The simplest way to get out of default is to repay your loan in full, but that's not realistic for most people who are already behind on payments.
If you have federal student loans, you have two main options: rehabilitation or consolidation. Both can bring your loans back into good standing, but they work differently.
- Loan rehabilitation: You agree to make 9 reasonable and affordable monthly payments over 10 consecutive months. The amount you pay is determined by your loan servicer and is equal to 10% or 15% of your discretionary income, divided by 12. After you complete the program, your loan is no longer in default, and the default record is removed from your credit history.
- Loan consolidation: Consolidation pays off your defaulted loan with a new Direct Consolidation Loan. You'll then repay the new loan under an income-driven repayment (IDR) plan. To qualify, you must first make 3 full, on-time, voluntary monthly payments. Consolidation is faster, but it doesn't remove the default from your credit report.
“Consolidation is typically a little bit of an easier way out,” says Michele Zampini, associate vice president of federal policy and advocacy at The Institute for College Access and Success (TICAS). Loan rehabilitation takes longer and involves more steps, but in the end, you do get the benefit of having the default removed from your credit.
Consolidation is a faster option, and you can complete it online without help. But it comes with trade-offs, especially if you've already made progress toward loan forgiveness or have a large amount of unpaid interest.
“You want to be careful when you consolidate because if you have some credit toward forgiveness programs, you might restart the clock,” says Carolina Rodriguez, director of Education Debt Consumer Assistance Program (EDCAP), New York's designated education debt consumer assistance program.
Another drawback is that when you consolidate, any unpaid interest is added to your loan's principal balance. That means you'll start paying interest on the interest.
Can defaulted student loans be forgiven or discharged?
In some cases, defaulted student loans can be forgiven or discharged, but only under specific circumstances. A discharge clears your obligation to repay a federal loan and may be granted in situations such as:
- Total and permanent disability
- Death
- Bankruptcy
- Instances of fraud or identity theft
- Borrower defense in a class action lawsuit
- School closure
- False certification of a borrower's loan eligibility by a school
- A school's failure to pay a loan refund as required
What to do if you're struggling to repay your loans
The best way to avoid student loan default is to stay proactive.
“I'd say the number one thing is don't ignore your loans. By that, I mean do not ignore your correspondence or skip checking your servicer account,” advises Rodriguez.
If you're struggling to make payments or at risk of falling behind, here are some steps to consider:
- Explore an income-driven repayment (IDR) plan: If you can't afford your current monthly payment, your first move should be to look into an income-driven repayment plan. These plans adjust your payments based on your income and family size.
- Request loan deferment: “If someone is in an income-driven repayment plan already, and that payment is still too high, they can access one of the deferment and forbearance options,” says Zampini. Deferment lets you temporarily pause payments, though interest often continues to accrue, and you'll pause progress toward repayment or forgiveness.
- Refinance your student loans: If you have private student loans, your options are more limited. Refinancing can help by replacing your current loans with a new one, ideally with a lower interest rate or longer repayment term to reduce your monthly payments. Just keep in mind that you'll need strong credit to qualify for better terms.
“I recommend that you avoid refinancing federal loans if you plan to take advantage of protections like deferment, rehabilitation, or income-driven repayment. However, if you have private loans, refinancing won't cause you to lose these benefits.”
— Kelly Larsen, Student Loans Editor, Credible
FAQ
How long does student loan default stay on your credit report?
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