Whether you have federal or private student loans, you’re expected to make your payments on time. If you don’t send the required amount by the deadline, your missed student loan payment can have a variety of consequences that affect your repayment, costs, and your finances overall.
Here’s what can happen if you make a late payment, and what you can do to prevent a missed payment in the first place.
10 consequences of a missed student loan payment
A missed student loan payment can have very serious repercussions. Many of these consequences don’t kick in until you are at least 30, 90, or 120 days on payments — but it’s still important to understand what could happen if you fall behind.
- Late fees: Both federal and private student loan lenders can charge you a fee for being late with payments. For example, you could be charged 6% of the payment amount for making a late payment on your federal Direct Loans. If your payment is $300 a month, this could add up to $18 in late fees.
- Damage to your credit score: Private lenders and federal loan servicers will report late payments to the three major credit reporting agencies. For federal loans, you will be reported late after 90 days; reporting for private loans varies by lender. Even one late payment on your credit history can reduce your credit score and make future borrowing more difficult and expensive.
- Loan acceleration: If you’re very late on payments, your loans will enter default. For federal loans, this happens after 270 days (about nine months) without a scheduled payment — though it can happen sooner for many private loans. When this occurs, your loan may be accelerated. This means the entire loan balance, including any unpaid interest, becomes due immediately.
- Lost eligibility for borrower benefits: If you’re in default, you can lose eligibility for certain federal loan benefits, including deferment and forbearance. You’ll also be unable to qualify for additional student loans.
- Liens on property: You may be unable to buy or sell property because a lien could be placed on it if you’re in default.
- Withholding of tax refunds and federal benefits: When your loans are in default, federal benefit payments and tax refunds can be withheld under a process called a Treasury Offset.
- Wage garnishment: Your earnings may be garnished in order to collect payments if you have defaulted on your loans. When your wages are garnished, your employer is instructed to withhold a portion of your pay and send it directly to your student loan servicer.
- Court proceedings: You could be sued for falling into default on federal or private student loans.
- Additional collection costs: When lenders incur collection costs to get their money, you will typically be responsible for paying these fees. Some additional fees could include court costs, attorney fees, and other expenses.
- Withholding of your transcript: Your school may withhold your official transcript if you’re in default on your student loans.
Late payments on federal student loans
When you have federal student loans, your loans become delinquent on the first day after a missed payment. However, the consequences of being late don’t kick in immediately.
Here’s what happens if you miss a payment on your federal loans:
- After one day: Your loan will be considered delinquent until you pay enough to get current or come to some other arrangement with your loan servicer.
- After 30 days: You can be charged a late fee equal to 6% of your missed payment.
- After 90 days: The delinquency will be reported to the major credit reporting agencies. This will adversely impact your credit and remain on your credit report for seven years.
- After 270 days: For most types of federal loans, you will go into default at this point. However, if your loans were awarded through the Federal Perkins Loan Program, you may go into default as soon as the day after a missed payment.
Entering default can trigger the most serious consequences, including loan acceleration, liens on property, seizure of federal benefits or wages, and court proceedings.
Late payments on private student loans
When you’re late on a private student loan, the consequences — and the timeline for those consequences — will depend on your lender’s specific policies.
However, here’s a general idea of what to expect from most private lenders after a missed student loan payment:
- After one day: Your loan will likely be considered delinquent as soon as you miss a payment.
- After 30 days: Your late payment will usually be reported to the credit reporting agencies. You may also owe late fees, which can be a flat amount or a percentage of the missed payment (although not all private lenders charge late fees). Returned payment fees can also apply if your original payment was rejected due to insufficient funds.
- After 120 days: You may go into default, which would be reported to the credit reporting agencies and could trigger collections activities, including court action, wage garnishment, and more.
Check with your lender to find out exactly what the consequences are if you miss a student loan payment and how long you have to catch up.
What to do if you miss a payment
If you miss a student loan payment, take action immediately to minimize the repercussions. Consider these steps:
- Make the payment as soon as possible. If it’s less than 30 days late, you can often avoid most of the consequences of the missed payment.
- Contact your lender if you can’t make a payment. Your lender can help you explore options such as putting your loan into deferment or changing your repayment plan to make the monthly costs more affordable.
- Create a plan to avoid missed payments in the future. This could include consolidating federal student loans or refinancing private student loans to reduce the monthly payment. With federal student loans, you can also consider income-driven payment plans that cap monthly payments at a percentage of your income.
Related: Learn more about refinancing your student loans
How to never miss a student loan payment again
There are many options to ensure you always pay your loan on time. Here are some steps you can take now to help you stay on track:
- Set up autopay so the payment comes directly out of your checking account. This can help you to avoid a missed student loan payment that occurs accidentally due to forgetfulness. Most lenders offer rate discounts for autopay as well.
- Change your student loan repayment plan. If you have federal student loans, you can often reduce your monthly payment by choosing a different payment plan. There are several different income-driven plans that cap payments at a percentage of your monthly income.
- Refinance your student loans. You typically can’t change repayment plans on private debt, but you might refinance your student loans to get a lower rate or a longer repayment term in order to lower your monthly costs.
- Ask your lender about deferment or forbearance. If you are experiencing financial struggles, you may have options to temporarily pause your payments.
By taking these steps, you can hopefully avoid missed student loan payments — and you won’t have to worry about how they can impact your finances.
Related: Learn more about refinancing your student loans