How a Missed Student Loan Payment Affects You

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. 

What happens if I miss a federal student loan payment?

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

Less than 30 days late

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. 

What you should do

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. 

30 to 90 days late

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. 

What you should do

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. 

90 to 270 days late

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.

What you should do

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

Eric Kirste

CFP®

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.

270 days late

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:

• Your school won’t release your official transcripts. 
• You can’t take out any more federal student loans.
• Your servicer may sue you in court, and you’re required to pay the charges. 
• The loan is accelerated, meaning you’ll owe the balance immediately and in full.
• Your wages and federal benefits, such as tax returns, may be garnished immediately.
• You won’t qualify for federal student loan benefits such as loan forgiveness or income-driven repayment plans.

What you should do

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. 

Tip

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. 

Read More

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What happens if I miss a private student loan payment?

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. 

What do I do if I miss my first student loan payment?

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

Eric Kirste

CFP®

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.

How does a missed student loan payment affect my credit score?

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:

• How late you paid: Missing your due date by just over a month won’t cause your credit score to drop as much as if you make your payment four months late, for example.
• How many other late payments you’ve made: More late payments on your credit report will cause your score to drop more than if it’s your first one.
• How good your credit score was to start: Higher credit scores tend to drop more than if you had a lower credit score from the start. 

What can I do to prevent missing student loan payments?

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: 

• Budget regularly: By following a budget, you can ensure you’ll always have the cash to make your payments and avoid any unwanted surprises.
• Sign up for a different repayment plan: Many income-driven payment plans are available if you have federal student loans. Private student loan borrowers may be able to modify their loan terms or refinance with a new lender. 
• Set up payment reminders: Your lender may be able to send you payment reminders, but you can also create reminders in places you’re likely to see them, such as your smartphone calendar.
• Sign up for autopay: You’ll avoid missed payments; some lenders even offer a rate discount if you sign up for autopay.
• Save for emergencies: Everyone goes through financial ups and downs, and an emergency fund can help pay the bills—loans included—when times are tight. 
• Ask your lender for help: If you’re having trouble making student loan payments, reach out to your lender for support. You may qualify for temporary forbearance assistance or a permanent modification to your loan. 
• Pay off your student loan early: If you can pay off your loans early, you won’t need to worry about missed payments—because you won’t have the loan anymore.