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College  |  November 30, 2023  |  Lisa Litant

What should you do if your student loan is delinquent?

A student loan that’s paid back on time can help you establish (and improve) your credit score. But if you’re late on payments—or don’t make payments at all—it can be bad news for your financial future. Here’s what you should know about student loan delinquency, and what you can do if it happens to you. 

What is delinquency?

Delinquency is when you’re late paying your student loan—failing to make a payment by the due date. Even one day late can make your account delinquent.

Federal and private student loans have different standards for when your account is considered delinquent:

• Federal student loans: If your payment is not received within 90 days after the due date, your loan servicer (the company that manages your loans for the government) will report it to the three major national credit bureaus, and it can show up on your credit report.^{footnote 1}
• Private student loans: Each lender has their own guidelines on when they’ll report a delinquent account to the national credit bureaus; it could be as few as 30 days after the due date. Once it’s reported, the delinquency will show up on your credit report. Check with your lender to see what their policy is.

A delinquent account on your credit report can make your credit score drop. That can make it harder for you to get a good interest rate on car loans and mortgages. Plus, a delinquent payment can stay on your credit report, affecting your credit. 

Delinquency vs default

Both of these terms deal with failing to make loan payments, but delinquency and default are two very different cases.

• Your account is considered delinquent when you miss a loan payment.
• If you stop making—or don’t make—any payments, the next step is default. This is a serious financial situation. It means you’ve failed to repay your student loans and it can damage your credit and financial health.

If your payments aren’t up to date, your account can go into default. At that point, you have to pay the entire amount owed, plus fees. The servicer or loan lender can send your account to collection. For federal loans, the servicer also has the right to take the balance of your payments from your wages.

Here are some additional differences between delinquency and default:

• Required payments: If your loan’s delinquent, you owe the missed monthly payments (plus late fees). When your servicer puts your account in default, the entire balance is due. For federal loans, after 270 days of no payments, your account will go into default.
• Repayment options: In delinquency, you might be able to move into another program, like deferment or forbearance. Once your federal loan is in default, you will lose the ability to change your repayment program to one that’s easier for you to manage.
• Financial impact: Once your account is in default, it will be sent to collection. As with delinquency, it’ll appear on your credit reports, but it will have a much more negative impact on future loans and credit for up to seven years.

What can you do if your loan is delinquent?

If you’re having trouble making a payment—or you’ve missed a payment—don’t ignore the situation. Contact your servicer or lender right away and be honest about your situation. You’re not the only one who’s struggled with this. There may be some options open to you, like negotiating a payment plan or consolidating your loans (which could cause you to lose some loan benefits). Remember, it’s easier to resolve a loan that’s delinquent than waiting until it goes into default.

Tips for getting back on track

1. For federal loans, see if you can change your repayment plan. The SAVE Plan is a new income-driven repayment plan that considers your income and family size. Many borrowers can lower their payments by applying for it.
2. For both private and federal loans, reach out to your lender/servicer. They may have alternatives to help you, especially if you’re having a temporary financial problem.
3. If you tend to forget to send in payments, consider setting up auto debit, so the amount’s taken from your bank account every month.
4. Consider creating a simple budget to see if you can reallocate some money to making even partial loan payments.

Student loan payments may feel overwhelming, especially when you’re just starting out. But just as being late can affect your credit rating negatively, making them on time can help you build your credit and boost your financial health.