Missed student loan payments happen, but it doesn’t need to be the end of the world. The specific consequences you’ll face—and your options for fixing the situation—depend on what type of student loans you have: federal or private.
We’ll explain what happens after a missed student loan payment for each type of loan and your options for getting back on track at each stage of student loan delinquency or default.
Table of Contents Skip to Section
The government lays out a solid timeline of events depending on how long it’s been since you missed a federal student loan payment:
| Late payment | What happens? |
| Less than 30 days late | Servicer tries to contact you |
| 30 – 90 days late | 6% late payment fee per month |
| 90 – 270 days late | Late payments reported to credit bureaus |
| More than 270 days (9 months) late | Loan becomes due in full, lose eligibility for federal loan benefits, income is garnished, court appearances and fees, lose access to official transcripts |
Your loan servicer will reach out to you as soon as you miss your payment to remind you that your loan is now considered delinquent and prompt you to pay.
If you can, make your payment. If you can’t, reach out to your servicer as soon as possible to make alternative arrangements, such as entering forbearance or an income-driven repayment plan.
You’ll owe a late payment fee starting when your payment has been overdue for at least 30 days. For example, if your payment was due on June 1, you won’t owe a late payment fee until July 1. This fee is equal to 6% of your missed payment amount.
Make your loan payment—with the added late penalty—if possible. If not, contact your lender for help before your payment becomes even more overdue.
If you go more than three months without catching up on your payment, your servicer will start reporting your missed payment to the credit bureaus. This can tank your credit score—a massive penalty if you’re just starting out in the world and hoping to apply for credit or rental housing.
Reach out to your loan servicer right away to make your overdue payment or arrange for help. Now’s also a good time to make a plan for getting your credit score back on track after the damage has been done.
Our expert’s advice
Implementing automation where possible within your financial life is important. Most financial institutions will allow you to automatically defer a portion of your monthly paycheck to a savings account, whether an emergency fund, retirement savings, or brokerage account. Setting up autopay on all bills and debt repayments will help you avoid late or missed payment fees. Some lenders even deduct a portion of your interest rate if you turn on the autopay function. Missed payments can incur additional penalties and lower your credit score if they go unresolved. Over time, a lower credit score may increase your overall cost to borrow because lenders will consider you higher risk. This higher cost will mean fewer funds for emergency savings, for planned savings, such as for a home or car, and for retirement accounts, health savings accounts, and other tax-advantaged accounts.
After 270 days, your loan switches from being delinquent to in default, which is far more serious. The government assumes you’re not trying to pay your loan at all anymore, and it triggers many consequences:
Reach out to your loan servicer to work on bringing your loans current again. If it’s been more than 360 days since your loans became delinquent, they were likely transferred to Default Resolution Group, the dedicated servicer for old overdue debts.
The government is offering a special Fresh Start program until September 30, 2024, that offers an easier process to get your loans back on track. After that date, you’ll go through a loan rehabilitation process to renew your loans. Otherwise, you will owe them for the rest of your life.
The sequence of events after you miss a payment on a private student loan varies with each lender. No standardized timelines apply to all private student loans. You’ll need to check the terms of your contract for your own loan.
Unlike federal student loans, most private lenders bounce your student loans straight into the “default” category without considering them “delinquent” first. You’ll typically owe late payments, and the credit damage will be immediate rather than on a set schedule.
Lenders may also accelerate your loan to become due in full or even outsource your loan to a collection agency that can sue you in court much faster than for federal student loans. You may also have fewer options to bring your loans current again.
If—like most borrowers—you have a cosigner, they will experience the same credit damage and may now be responsible for repayment. For these reasons, it’s essential to reach out to your lender before missing any private student loan payments. Many offer support programs.
Leaving school to transition into the working world is a busy time, and it’s understandable if your student loans weren’t top of mind. Maybe you moved and didn’t update your lender with your new address, or perhaps you just forgot. Either way, missing your first student loan payment is not uncommon.
All missed payments—whether your first or your 50th—are treated the same way. You can always call your lender and explain the situation. It may be willing to waive late fees and not report it to the credit bureaus as a sign of goodwill, but it’s not a requirement.
If your lender isn’t willing to lend you an olive branch, you must pay a late fee and experience the credit damage as that negative mark is added to your credit report.
Our expert’s advice for getting back on track
Pay all missed payments and penalties as soon as possible. Once the payments have posted to the loan account, call the loan company and explain the circumstances. If you have a good credit history or payment record with this loan company, explaining this one-time circumstance may lead to fixing the late payment to ensure it doesn’t show up on your credit report. Taking action is important to show you care about fixing the issue and it will not happen again.
Missed student loan payments always have a negative impact on your credit score once they’re listed on your credit report. The hard-to-answer question is, by how much? No one-size-fits-all number applies here, but you can expect your credit score to drop as much as 90 points before you default on your student loans.
The exact amount you’ll see your credit score drop by depends on a few factors:
Missed student loan payments aren’t the end of the world, but it’s best to avoid them if possible. Here are strategies to help you do that:
The post How a Missed Student Loan Payment Affects You appeared first on LendEDU.
