Student loan debt is one area where ignoring the problem makes it dramatically worse. Here’s exactly what happens if you stop paying — and more importantly, what to do if you genuinely can’t afford your payments.
The timeline of consequences
- Day 1 of missed payment. Your loan is considered delinquent. Nothing visible happens yet, but late fees may start accumulating.
- 30 days late. Your loan servicer will contact you. This is still fixable with no major damage if you address it now.
- 90 days late. Your servicer reports the delinquency to all three credit bureaus. Your credit score can drop 50–100+ points. This follows you for 7 years.
- 270 days late (federal loans). Your loan goes into default. This is the point of serious consequences.
What happens in default
- The entire remaining loan balance becomes due immediately
- The government can garnish your wages — take money directly from your paycheck without a court order
- Your tax refund can be seized
- Social Security benefits can be withheld
- You lose eligibility for any future federal student aid
- Collections costs (up to 25%) get added to your balance
What to do if you can’t afford your payments
This is critical: there are options specifically designed for people who can’t afford payments. Do not just stop paying.
- Income-Driven Repayment (IDR). Your payment gets capped at 5–10% of your discretionary income. If your income is low enough, your payment could be $0 per month — legally, with no default.
- Deferment or forbearance. Temporarily pause payments during hardship. Interest may still accrue on unsubsidized loans, but you’re protected from default.
- Call your loan servicer. Log in to StudentAid.gov to find your servicer. Explain your situation. They have options — it’s better for them if you pay something than if you default.
Getting out of default
If you’re already in default, there are programs to get out — Fresh Start and loan rehabilitation. It takes time and effort but it’s possible to recover.