Can You Be Arrested for Not Paying Student Loans?

Defaulting on student loans is common, especially when borrowers face financial challenges. While missing payments can lead to serious consequences, such as damaged credit or a court summons, you cannot be arrested or jailed simply for not paying your student loans. Understanding your options can help you manage payments and avoid default. 

Can you go to jail for not paying student loans?

The consequences of default are serious, but you can’t go to jail for nonpayment of student loans. You might have seen the headline about a Texas man being arrested for $1,500 worth of student loans. We’ll go into the specifics below, but he was arrested for being in contempt of court. 

To keep from being arrested if your lender sues for repayment, pay attention to your mailbox. Keep an eye out for communications from your lender, collections attempts, and court notices. 

Your rights

If you can’t pay your student loans, you have certain rights when it comes to debt collectors through the Fair Debt Collections Practices Act (FDCPA). This prevents debt collections agencies from engaging in abusive collections practices such as: 

• Trying to collect extra charges plus the amount you owe
• Threatening to have you arrested
• Harassing you (calling multiple times a day or using profanity)
• Misleading you in any way

If a collections agency uses these tactics, you have the right to sue them under that federal law.

Does my state have specific student loan payment laws?

Multiple states have passed laws governing how loan servicers can treat student borrowers. For example, in California, the Student Borrower Bill of Rights includes the following protections:

• Loan servicers must provide accurate information about repayment options. Borrowers must get accurate information about income-based repayment plans or other flexible repayment options to avoid default.
• Servicers and lenders must minimize fees. Fees are capped at 6% of the past-due amount.
• Loan servicers must notify borrowers they’re transferring their loan to a new servicer at least 15 days before the borrower is required to send in a payment.
• Prohibits unfair or deceptive practices. 

If you’re facing default or delinquency, you have federal—and sometimes even state—rights that protect you from unfair debt collection practices and deceptive lenders. 

Student loan lenders’ rights

Your lender also has rights to recover the money they’ve loaned you. 

Depending on whether your lender is federal or private, they have different rights to collect. Federal student lenders have more rights than private lenders. Because they’re under the federal government, they can garnish your wages and take your tax return to collect payment. Private lenders can’t do that without a few extra steps.

Private lenders have a smaller arsenal to enforce repayment. Most often, they rely on collections agencies and the legal system to recover money from borrowers in default. 

Has anyone ever been arrested for not paying their student loans?

We mentioned a Texas man arrested in relation to his student loans. The full story is more complex than just missed payments. 

Paul Aker was arrested for disregarding the legal system, not for defaulting on his loan. The steps that led to his arrest include: 

1. Aker defaulted on a private student loan in 1989.
2. The private lender couldn’t collect the debt and transferred it to the U.S. Department of Education. 
3. The Department of Education attempted to collect the debt. 
4. The U.S. government sued Aker for the remaining balance on the loan. 
5. He failed to answer a legal complaint served to him, and a judgment was made in favor of the U.S. government. 
6. The government tried to collect the debt again. 
7. The court ordered Aker to attend a deposition. The U.S. Marshals Service called him to attend, and he refused. 
8. In 2016 (almost 30 years after default), an arrest warrant was issued. 

Even after he was arrested, Aker didn’t spend time in jail. Instead, he was fined $1,200 for getting the U.S. Marshals Service involved. 

This was years in the making. Aker ignored multiple collections attempts, missed court appearances, and dismissed legal summons. This all led to his arrest for contempt of court. 

While this originated from unpaid student loans, the issue that earned him an arrest warrant was not showing up to court. 

If you default on a student loan, arrest is unlikely. In the 2019 fiscal year, the federal government reduced the number of student loan default recovery lawsuits to 261. 

Common consequences of not paying student loans

You might not spend time in jail if you don’t pay your student loan, but default has other serious consequences depending on whether you have a federal or private loan. 

Federal loans move fast, with tools to enforce repayment with the full backing of the U.S. government. Private loans have less power to enforce repayment, but that doesn’t stop them from enacting consequences such as collections and loan acceleration. 

Student loan default consequences	Federal	Private
Withhold tax refunds	✔
Wage garnishment	✔
Ineligible for other forms of federal aid	✔
Loss of federal protections (including IDR, rehabilitation, and forbearance)	✔
Legal action (not often)	✔
Suspended professional licenses (in some states)	✔
Report delinquency or default on your credit report	✔	✔
Added collections and late fees	✔	✔
Involve collections agencies	✔	✔
Loan acceleration	✔	✔
Damage to your cosigner’s credit	✔	✔
Jeopardized employment (denied security clearances or promotions)	✔	✔
Withheld academic transcripts	✔	✔
Legal action to request wage garnishment or a lien		✔

One powerful option federal loan holders have to get their money back is to garnish wages. They don’t need a court order to begin taking money from your paycheck—just a notice stating your wages will be garnished within 30 days. 

The federal government orders your employer to withhold 15% of your disposable income to repay the defaulted loan, and this continues until the outstanding balance is repaid or the default is resolved. 

Your options if you can’t pay your student loans

Most people don’t stop paying their student loans because they don’t want to. It’s often tied to a change in your financial circumstances where you just can’t afford the monthly payment. 

Regardless of why you can’t pay, you might have options to alleviate the financial stress of a student loan payment: