Key takeaways

  • A defaulted student loan happens when the borrower does not make payments on their student loan, often for a few months or more.
  • Having a student loan in a default state can have serious consequences, including poor credit, the loan payments becoming due in full immediately, the lender taking you to court and not being eligible for forbearance or deferment.
  • To avoid the worst consequences, you can look into federal student loan rehabilitation or consolidation, or look into negotiating a settlement for private student loans.

What is student loan default? Student loan default occurs when a borrower fails to pay their loans according to the terms of their loan agreement. The exact timeline varies depending on whether you have federal or private student loans.

Defaulting on a student loan has serious consequences. Your entire loan balance may come due immediately and you will be ineligible for forbearance and deferment. But a temporary program from the U.S. Department of Education, Fresh Start, can help you avoid these consequences for federal student loans.

How do you go into default on a student loan?

When you miss your due date, your loan first becomes delinquent. Your student loan will remain delinquent until you pay the amount you owe, qualify for deferment or forbearance, change your repayment plan or enter default.

Once your student loan payment is 90 days late, your loan servicer will report your delinquency to the three credit bureaus — Experian, Equifax and TransUnion.

At that point, your loan will transition from delinquency to default on a timeline that depends on the type of student loans you have.

  • With federal student loans, your loan is usually considered in default when you don’t make your scheduled payments for 270 days. One exception is Perkins Loans, which can be considered default if you miss a single payment.
  • With private student loans, you are usually considered in default after you miss three monthly payments or 90 days total.

How do I know if my student loans are in default?

If your student loans become delinquent or past due, your loan company or servicer will likely notify you. You may receive a notice in the mail, a call from your servicer or an email with details on your late payment.

Once your student loans enter default, you should see them listed on your credit reports.  You can get free weekly credit reports from the three credit bureaus using

You can also log into the Federal Student Aid website to see the status of your federal student loans, including any information on past-due, delinquent or defaulted amounts.

What happens if I default on my student loans?

You could face a variety of consequences if your loan enters default.

  • Credit approval becomes difficult: Default hurts your credit score. So it also hurts your ability to get approved for anything involving a soft or hard credit check. You might have trouble getting a credit card, a car loan, a mortgage, a cell phone, utilities or affordable homeowners insurance rates. You may face higher rates or need a co-signer.
  • Owing immediately: With federal student loans, your entire unpaid balance and owed interest become immediately due through a process called “acceleration.”
  • Fewer borrower protections and less aid: Your federal loans will no longer be eligible for deferment or forbearance, nor can you change your repayment plan at that point. You won’t be able to access additional federal student aid, either.
  • Going to court: Your federal or private loan servicer can take you to court and your wages could be garnished. In addition, you will likely be on the hook for court costs, collection fees, attorney fees and additional costs associated with the collection process.
  • Academic issues: Your school cmay withhold your academic transcript until you get your student loans out of default.

While all of this takes place, late fees and interest will continue to accrue on your debts, meaning the problem only gets worse.

Defaulting can impact your life and finances for years to come. If you are concerned that you may default or are having financial challenges, do not ignore the issue. Reach out to your loan servicer proactively and find out about your options for avoiding default.

How do I get my student loans out of default?

In addition to understanding student loan default, it’s important to know how to turn the situation around. If you’ve already defaulted on your student loans, there are ways to get back in good standing.

Getting federal student loans out of default

Normally, there are three main ways to get your federal student loans out of default: paying your entire loan balance in full, pursuing loan rehabilitation or applying for loan consolidation. Since most people cannot afford to pay their loans off in one big chunk, rehabilitation and consolidation are the only options most can consider.

But a temporary program called Fresh Start offers additional relief.

Fresh Start

Fresh Start is a relief program for defaulted federal student loan borrowers that ends on Sept. 30, 2024. It’s offered by the U.S. Department of Education (ED). To enroll, ou must contact your loan holder (whether the ED or a guaranty agency).

You can enroll in the program for free to have your federal loans removed from default. Additional benefits include:

  • Getting access to federal student aid again.
  • Transferring your loan back to a loan servicer.
  • Removing the default from your credit report.

You may also enroll in an income-driven repayment plan. Your monthly payment will be set based on your income and could be as little as $0. If you entered default due to a lack of income, this program could help you stay on track with payments.

Federal loan rehabilitation

Currently, loan rehabilitation has been put on hold in favor of the Fresh Start program. However, typically, federal loan rehabilitation starts with contacting your servicer. When you rehabilitate a federal Direct Loan or FFEL loan, you must:

  • Make nine affordable monthly payments (as determined by your loan holder) within 20 days of the due date and agree to these terms in writing.
  • Make all nine of the agreed-upon payments during a period of 10 consecutive months.

The monthly payment you make under loan rehabilitation typically equals 15 percent of your monthly discretionary income. According to the U.S. Department of Education, discretionary income is “the difference between your annual income and 150 percent of the poverty guideline for your family size and state of residence.”

Because of the way loan rehabilitation payments are determined, your loan amount during the rehabilitation process could be as low as $5 per month.


With federal student loan consolidation, you combine your existing federal student loans into one new one. To qualify for this plan for defaulted loans, you must do one of the following:

  • Agree to enroll your new Direct Consolidation Loan in an income-driven repayment plan.
  • Make three consecutive, voluntary, on-time, full monthly payments on the loan in default before consolidating.

This option does not remove your default from your credit record.

Getting private student loans out of default

The rules are different for private student loans. If you have private student loans in default, you may be able to negotiate a settlement on your debt in collections. You could also try to work with your loan servicer to get back up to date, which you can facilitate by reaching out and explaining your situation.

Many individuals with private student loan debt they cannot manage also reach out to a student loan lawyer for help.

Next steps

Once you have taken steps to get your student loans out of default, it’s important to avoid making the same mistakes again. Your best move is making sure that you have a monthly payment that you can afford without financial hardship.

You can do this by:

  • Looking into income-driven repayment plans that let you pay a percentage of your discretionary income on your loans for 20 to 25 years.
  • Refinancing your student loans with a private lender to secure a lower interest rate and a more affordable payment. (However, we recommend against this option if you have federal loans — it means you won’t be eligible for future programs like Fresh Start.)
  • Choosing among federal student loan repayment plans (for existing federal loans), which may let you repay your loans for up to 30 years.

Also make sure that you set yourself up for success when it comes to planning for your student loan payments. This can mean starting a monthly budget that helps you plan for each of your bills and your average expenses, but it can also mean cutting discretionary spending so you have more wiggle room in your budget each month. Finally, you can also consider setting up your student loan payments to be sent in automatically so you never forget to pay.

Frequently asked questions

  • Unless you use the Fresh Start program, negative marks caused by unpaid student loans will remain on your reports for at least seven years. Student loans are notoriously difficult to discharge in bankruptcy, and disputing them on your credit reports will not help, either.

    Your best bet is to make sure your payment is affordable and pay what you owe, no matter how long it takes. However, some student loan forgiveness programs can help you wipe away your debt sooner rather than later.
  • If you cannot repay your student loans now, you may want to look into federal deferment and forbearance. Both let you pause your student loan payments while you get back on your feet. Interest may still accrue during this time, but either type of relief can buy you time.

    While there aren’t as many options for private student loans, borrowers with these loans can reach out to their lender for hardship relief options and alternative repayment plans.
  • Generally speaking, you cannot go to jail for defaulting on your student loans. However, your lender can and likely will sue you, your credit score could take a significant hit, your wages could be garnished and you could end up owing a lot more in fees and interest over the long run. If there is a lawsuit, not complying with the court could result in an arrest warrant.
  • No, unfortunately not. Federal student loans are not eligible for any forgiveness programs if they are in default.