Missing a student loan payment can have negative consequences, but the severity of those consequences depends on how long the payment is overdue and whether the loan is federal or private. Here are some potential consequences of missing a student loan payment:
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Late fees: After 30 days, your loan servicer can begin charging you up to 6% of your missed payment amount as a late fee.
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Credit damage: If your federal student loan payments are past due, your servicer will report the delinquency to the three national credit bureaus if a payment is not made within 90 days. A late payment may have a negative impact on your credit score, which can make it harder to get approved for loans or credit cards in the future.
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Default: A loan goes into default after a borrower fails to make a payment for at least 270 days, or about nine months. Once in default, the borrower can no longer receive deferment or forbearance and would lose eligibility for additional federal student aid. At that point, the loan holder can also take the borrower to court. Defaulting on a student loan can have serious financial consequences, including wage garnishment, tax refund garnishment, and damage to your credit score.
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Wage garnishment: If your loans enter default, your wages could be garnished. This means that a portion of your paycheck would be withheld to repay your student loans.
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Loss of federal loan benefits: If you default on a federal student loan, you may lose federal loan benefits, such as deferment or forbearance.
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Legal action: If you default on a student loan, your loan holder may sue you. This can result in wage garnishment, liens on your assets, and other legal consequences.
Its important to note that if you miss a payment, you should take action as soon as possible to avoid further consequences. Contact your loan servicer to discuss your options, such as deferment or forbearance, or to set up a repayment plan that works for you.
