Consequences of Not Paying Your Loan on Time
Falling behind on student loan payments has serious consequences. It is important to take action. Here's what can happen:
- Damage to your credit: making it hard to get a cell phone, car loan, mortgage or even rent an apartment.
- You’ll owe more money: interest accrues and increases the amount you owe.
- You'll get sent to collections: your wages could be garnished to pay your loan bills.
What happens if I become delinquent on my loans?
If you're having trouble paying your monthly loan bill, the first thing you should do is to contact the servicer or lender of your loan. The servicer or lender will be able to help you get back on track. You can find their contact information on the National Student Loan Data System.
There are several options to help you with repayment:
- What it is? Deferment is a way to postpone payments on your loan.
- Who is it for? Deferment is for borrowers who are unemployed, have an extreme economic hardship, going to school at least half time, or on active military duty.
- Perks of deferment: one of the benefits of deferment is the federal government will pay the interest on your subsidized loan during a deferment.
- How to make it happen: contact the owner of your loan and explain your situation. They'll see if you meet the qualifications for deferment.
- What it is? Forbearance is a way to postpone payments on your loan.
- Who is it for? Forbearance is for borrowers who are having trouble making their loan payments. Forbearance is granted at the discretion of the loan owner on a case-by-case basis.
- Perks of forbearance: there are not a lot of perks that come with forbearance... it just gives you a little time to get your finances together. During forbearance, the interest on your loans will continue to accrue, increasing the total amount you owe.
- How to make it happen: contact the owner of your loan and explain your situation. They will consider your situation and let you know what options you have.
Change your repayment plan
- What it is? You may be able to choose a different repayment plan that offers a more affordable monthly payment.
- Who is it for? There are a few different types of repayment plans to suit different financial situations - see Repayment Basics for a breakdown of the different repayment plans.
- Perks of changing your repayment plan: you get more affordable payments while still making progress towards paying off your loans.
- How to make it happen: contact the owner of your loan and ask about your repayment options.