What Happens if You Never Pay Your Student Loans? Consequences and Repayment Help

Student loan payments can put serious pressure on your budget. According to a Consumer Financial Protection Bureau survey, more than 60% of borrowers said they struggle with repayment, and 1 in 3 have missed a payment.

If you’re thinking about not paying your student loans, it’s important to understand the consequences. Ignoring your debt can lead to default, hurt your credit, and cause long-term financial harm. In this guide, learn what happens if you never pay your student loans, along with steps you can take to avoid those consequences.  

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What happens if you stop paying your student loans?

If you stop making payments on a student loan, your loan will eventually go into default. The timeline to default depends on the type of loan you have: 

• If you have federal student loans: Your loan becomes delinquent as soon as your first missed payment. After 90 days of nonpayment, your loan servicer will report the delinquency to the credit bureaus, which can lower your credit score. If you still haven’t paid after 270 days, your loan goes into default.
• If you have private student loans: Most private lenders report missed payments to the credit bureaus after 30 days, but the exact timing can vary. Default usually happens after 120 to 180 days of nonpayment, depending on the lender’s policy.

When a student loan goes into default, it can have serious consequences for the borrower.

“Besides just hurting your credit, defaulting on loans can lead to wage garnishment,” says Jack Wang, a wealth adviser at Innovative Advisory Group and host of the Smart College Buyer podcast. “In fact, defaulting on federal loans can lead to garnishing of tax refunds and a portion of Social Security benefits,” he adds.

Consequences of defaulting on student loans

Defaulting on your student loans can lead to serious and lasting consequences, especially with federal loans. Here’s what to expect:

• Damage to your credit: A default is reported to the credit bureaus and can stay on your credit report for up to 7 years. It will immediately lower your credit score and make it harder to qualify for other loans, credit cards, or housing.
• Wage garnishment: For federal loans, the government can take up to 15% of your discretionary wages directly from your paycheck without needing a court order.
• Treasury offset: The government can also withhold money you’re owed, such as tax refunds or a portion of your Social Security benefits, to collect on the debt. This applies only to federal loans.
• Loan acceleration: If your loan goes into default, the full balance, including interest, can become due immediately. This can happen with both federal and private loans.
• Extra fees: You may be charged collection costs, court fees, and attorney’s fees, which can significantly increase the total amount you owe.
• Lawsuits and judgments: Private lenders can sue you to collect on a defaulted loan. If they win, they may be able to garnish your wages or place liens on your property. Each state has a statute of limitations that limits how long they have to take legal action.
• Loss of federal aid and protections: Once a federal loan is in default, you’ll lose access to federal student aid, income-driven repayment plans, deferment, and forbearance options until the loan is rehabilitated or consolidated.

Can student loans be forgiven or discharged?

Student loans are rarely discharged, but it’s possible if you have federal loans under certain circumstances. Here are a few examples:

• Your school closed: If your school shuts down while you're enrolled or soon after you withdraw, you may qualify for a discharge of your federal loans. 
• The school misled you: If your school misrepresented its programs or broke certain laws, you may be eligible for loan discharge under borrower defense rules. 
• You become disabled: Federal student loans can be discharged if you become totally and permanently disabled.
• You pass away: Federal student loans are discharged if the borrower dies. Parent PLUS loans can also be discharged if the student the loan was taken out for dies.

In some bankruptcy cases, student loans can be discharged if you’ve declared bankruptcy, but it’s difficult. You’d need to prove that repaying the loans would cause undue financial hardship.

What if I can’t afford my student loan payments?

If you’re having trouble affording your student loan payments, you don’t have to stop paying altogether. Federal loans offer several options to help you lower or pause your payments without falling behind.

“If a borrower is struggling to repay their loans, the first action should be to get on an income-driven repayment plan,” says Robert Farrington, founder of The College Investor. 

“This can lower your income to a percentage of your income, and if you have no income, it could be $0. In the future, this option may change with the new Repayment Assistance Plan (RAP),” adds Farrington. 

Learn More: How Trump’s 'Big Beautiful Bill' Reshapes Federal Student Aid

Beyond income-driven repayment, you may qualify for deferment or forbearance, which can let you temporarily pause payments. However, interest generally still accrues during these payment pauses, which can end up making your loan more expensive in the long run. 

Refinancing is another option that could reduce your monthly payment if you qualify for a lower interest rate. Just keep in mind that refinancing federal loans with a private lender means giving up federal protections like income-driven repayment and loan forgiveness.

Is there a statute of limitations on student loans?

Federal student loans don’t have a statute of limitations. That means the government can collect on the debt indefinitely, including through wage garnishment or Treasury offsets.

Private student loans, on the other hand, do have a statute of limitations, usually between three and 10 years, depending on your state. Once that period passes, the lender can’t sue you to collect the debt, but they can still contact you and try to collect through other means.