Being in default on a student loan means that you have failed to make payments according to the terms agreed upon in your loan contract (promissory note) for a specified period. For federal student loans, default typically occurs after about 270 days (roughly nine months) of non-payment, while for private student loans, default usually happens after missing three monthly payments or about 90 days, though this can vary by lender
. When a student loan goes into default, several serious consequences follow:
- The entire loan balance, including accrued interest, may become due immediately, a process called acceleration
- Your loan may be turned over to a collection agency, which can add collection fees up to 25% of your loan balance
- Your wages can be garnished, and your federal and state tax refunds, as well as Social Security payments, can be withheld to repay the debt (applicable to federal loans)
- Your credit score will be severely damaged, and the default can remain on your credit report for up to seven years, making it harder to get credit, housing, or even certain jobs
- You lose eligibility for deferment, forbearance, and federal student aid until you resolve the default
- Your school may withhold your academic transcripts, affecting your education plans
- In some states, professional licenses (such as for doctors or teachers) and even driver’s licenses may be suspended due to default
- You may be sued by your lender and be responsible for court and attorney fees
Defaulting on student loans has long-term financial and professional impacts and should be addressed promptly by contacting your loan servicer to explore options like rehabilitation, consolidation, or repayment plans to avoid or resolve default
