What happens if you never pay your student loans?

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If you never pay your student loans, your credit score will drop, you’ll have a harder time taking out future credit and you may even be sued by your lenders. The short- and long-term consequences can be tough to recover from, which is why it’s essential to make payments on your loans or seek help if you’re expecting to miss payments. Here’s what to know if you’re approaching student loan default.

What happens if you don’t pay student loans?

Not paying back your student loans has both short-term and long-term consequences, depending on where you are in repayment.

The short-term consequences

If you’re even one day late on your student loans, you’re immediately considered delinquent. Here’s what can happen if you miss a few payments:

  • Late fees. A late payment — one you eventually make but not by the due date — could result in a late payment fee. This amount varies by lender, and not all of them institute this fee, but it’s very common to see either flat fees or one that’s a percentage of your missed payment.
  • Withheld tax refund. If you’re behind on your federal student loans, the government could withhold your refund until you’re up to date on payments.
  • Wage garnishment. If you’re a few months behind on your student loans, your lender could contact your workplace and garnish your wages. It can do this until you’ve paid a portion of your loans back and are in good standing.

The long-term consequences

Delinquent loans take effect immediately after one missed payment but might not get reported to the major credit bureaus for 90 days. Here’s what happens the longer you don’t pay your student loans.

  • Default. After several months of missed payments, your loan will enter default. The specific timing and consequences of default vary by lender, but in some cases the entirety of your student loan balance immediately comes due.
  • Lost eligibility for future aid. If you’re currently in default, you could lose out on any future student aid, including scholarships, grants and federal student loans. Defaulted loans on your credit report could also make it harder to buy a home, buy a car or take out a credit card.
  • Credit score drop. The longer you go without paying your student loans, the more your credit score will tank.
  • Potential lawsuits. Your original lender could sell your loan to a debt collection agency, which can call and send you letters in an attempt to collect a debt. To garnish wages, lenders will need to go through court. You could get sued if you don’t repay your loans.

How to get rid of student loans

If you’re struggling to repay your student loans, there are different repayment plans that keep your loans current and don’t break the bank. Consider all of your options before choosing the best one for your needs.

Income-driven repayment plan

If you’re struggling to afford repaying your student loans, you can enroll all of your federal loans into an income-driven repayment plan. There are a few different types based on your needs, but they all have similar methods. You’ll make monthly payments based on your discretionary income and family size. After 20 or 25 years, depending on the plan, the remaining balance on your loans is forgiven. You’ll need to update your information every year so your payments accurately reflect your financial situation.

Public Service Loan Forgiveness (PSLF)

PSLF is available for federal student loan borrowers who go into a public service career. After 10 years of making payments on an income-driven repayment plan and working for an eligible employer, your remaining debt is forgiven.

Debt snowball or debt avalanche

If you have many different student loans and a mix of federal and private student loans, you might want to try a different approach. Both the debt snowball and avalanche methods have you list out each debt, including total amount, monthly amount, interest rate and due date.

In both cases, you’ll make minimum payments on all your loans. For the snowball method, you’ll put every spare dollar you have toward the debt with the lowest amount. For the debt avalanche method, you’ll put every spare dollar towards the debt with the highest interest rate. You’ll do this until each debt is paid off, moving on to the next-smallest debt (or the one with the next-highest interest rate) until all of your student loans are paid in full.


If you have high interest rates or many different student loans, you might want to consider refinancing. This is when you take out a new loan to pay off all of your current student loans. You’ll get new repayment terms and a new interest rate, then make one monthly payment to your refinanced loan until it’s paid in full. You can only refinance your loans with private lenders, so refinancing your federal loans means that you’ll lose certain protections, like forbearance or the option to enroll in an income-driven repayment plan. But if you have great credit and can get a lower interest rate than what you’re paying now, it might be worth it.

Student loan settlement

Student loan settlement is when you settle for repaying your student loans for less than you owe. If you’re so far behind on your student loans and your credit score has already suffered, this might look enticing, though you’ll need to have a lump-sum amount to pay off the outstanding settled balance. Lenders aren’t required to settle, and this option might not go through, but some lenders might consider it to get at least some portion of your outstanding amount.

Will student loans be forgiven?

While President Biden has mentioned student loan forgiveness during his campaign, nothing has officially solidified during the first few months of his presidency, which is why it’s critical to keep making payments on your loans. Even if some form of forgiveness does come down the line, you shouldn’t wait for it; making payments on your loans ensures that you don’t end up in default. And remember, federal student loan borrowers aren’t required to make payments until after Sept. 30, so you do have some breathing room if you’re currently struggling.

The bottom line

Not paying back your student loans can cause catastrophic results for your finances, your credit and your future borrowing prospects, so do your best to stay as current as possible on your loans. If you’re struggling, find a repayment plan that works for you, like an income-driven repayment plan, or refinance your loans. Not paying back your student loans will hurt you for years to come, so the best course of action should be the one that gets you back on track.

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Written by
Dori Zinn
Contributing writer
Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
Edited by
Student loans editor