What Happens When You Miss a Student Loan Payment

About 1 in 3 student loan borrowers have reported missing a payment, according to a survey from the Consumer Financial Protection Bureau. A missed payment can happen for many reasons — maybe you forgot the due date or an unexpected expense came up — but the consequences can be serious. You could face late fees, credit score damage, collection calls, or even wage garnishment.

What happens after you miss a student loan payment depends on the type of loan you have and how long your account remains past due. Here's what to expect after missing a payment and steps you can take to limit the consequences.

Current student loan refinance rates

What happens if you miss a student loan payment?

Your student loan becomes delinquent one day after you miss a payment due date. At that point, you may be charged a late fee, which adds to your total balance. The loan will remain past due until you pay the overdue amount or work out an option like deferment or forbearance with your loan servicer.

Delinquency isn't reported to the credit bureaus right away. With federal loans, servicers wait at least 90 days before reporting a missed payment. Private lenders may move faster, often reporting after 30 days. Once reported, the delinquency can damage your credit score.

If payments continue to be missed, your loan can enter default. Federal student loans usually default after 270 days of nonpayment. With private loans, the timeline is shorter, often 120 to 180 days, depending on the lender. Default comes with serious consequences, including collections, wage garnishment, and the loss of borrower benefits.

See Also: How To Write a Goodwill Letter for a Late Student Loan Payment

How does a missed payment affect your credit score?

A missed student loan payment won't hurt your credit right away, but once it's reported to the credit bureaus, the impact can be significant. The effect on your credit score depends on your credit profile.

“According to a VantageScore analysis on federal student loans reporting, the immediate drop in a credit score can range from 36 to 129 points, depending on the borrower's starting credit risk tier (from subprime to superprime),” says Dr. Andrada Pacheco, EVP and chief data scientist at VantageScore.

“If the consumer later brings the account current, the negative impact will gradually lessen over time, though the record of the missed payment will remain until it naturally ages off.”

Once reported, a missed payment stays on your credit report for seven years. During that time, it can make it harder to qualify for new loans or secure competitive interest rates, which means you may end up paying more when you borrow.

Learn More: Student Loan Credit Repair: Steps To Rebuild Your Credit Score

What are the consequences of delinquency vs. default?

Delinquency begins the day after you miss a payment. You may be charged a late fee, and if the payment remains overdue, your lender can report the delinquency to the credit bureaus. Private lenders often report sooner than federal loan servicers, but in either case, the result is potential credit score damage.

Default happens when a loan stays delinquent for an extended period. Federal student loans enter default after 270 days, while private lenders may declare default much sooner — typically after 120 to 180 days. Once in default, your entire loan balance becomes due immediately, a process called loan acceleration. You'll also be responsible for collection fees, and the default will stay on your credit report for seven years.

Default can also trigger more serious consequences. Your debt may be sent to a collections agency, and you could face wage garnishment, tax refund withholding, or even offsets to Social Security benefits.

See Also: How To Remove Student Loans From Your Credit Report

What to do if you miss a student loan payment

If you miss a payment, it's a good idea to act quickly to avoid default. Here are some steps you can take:

• Contact your servicer right away: Reach out to your loan servicer as soon as possible to explain your situation and ask about available options. Servicers may be able to suggest short-term or long-term solutions.
• Catch up if you can: The easiest way to resolve delinquency is to pay the overdue amount and bring your account current. Review your budget to see if you can cut back on discretionary spending to cover the missed payment.
• Ask about deferment or forbearance: If catching up isn't possible, you may qualify to temporarily pause payments through deferment or forbearance programs. These options are generally available for federal loans, though some private lenders may offer limited hardship programs.
• Consider an income-driven repayment (IDR) plan: If high monthly payments are the issue, an IDR plan can make your federal loan payments more affordable by adjusting them to your income and family size.

How to avoid missing student loan payments in the future

The consequences of a missed payment can be serious, so it's best to prevent them whenever possible. These strategies can help you stay on track:

• Enroll in autopay: Setting up autopay ensures your payment is automatically withdrawn each month, so you don't have to worry about forgetting your due date. Just make sure your account has enough funds to avoid overdraft fees.
• Check in regularly: Even with autopay, it's important to monitor your loan account and credit report. “Regularly checking your credit reports can help you track your student loan accounts and help you monitor your payment history to ensure you do not miss any loan payments,” says Margaret Poe, head of consumer credit education at TransUnion. Staying vigilant also helps you spot errors or issues early.
• Budget for monthly payments: Plan ahead by setting aside money for your student loan bill each month. If your budget is tight, look for areas to cut back so the funds are available when the payment comes due.
• Switch repayment plans if necessary: If your federal student loan payments are too high, consider alternative repayment plan options. Income-driven repayment plans or extended loan terms can lower your monthly payment amount and make it easier to stay current on payments.