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What happens if I default on a federal student loan?

If your loan holder is unable to obtain payment from you for 270 days, they will take steps to place the loan in default and attempt to collect on the loan.

New: The U.S. Department of Education’s (ED) Fresh Start Program is a one-time temporary initiative to help student loan borrowers get their loans out of default.

Default is the failure to repay a loan according to the terms agreed to in the promissory note. For most federal student loans, you default if you have not made a payment in more than 270 days.

If you haven’t made a payment on your federal student loan for at least 270 days (nine months), and you have not entered into an agreement with your lender or servicer to postpone your payments (like deferment or forbearance), you are probably in default.

During the months in which you miss payments on your federal student loans, your servicer must exercise "due diligence" in attempting to collect the loan. Your servicer must make repeated efforts to locate and contact you about repayment.

If you have not received a letter from your servicer and you believe you could be in default, contact your servicer immediately. Ask about repayment options and find out if it is possible for you to avoid default.

Once your federal student loan goes into default, you could face a number of consequences:

  • Your wages can be garnished without a court order
  • You can lose out on your tax refund or Social Security check, because the money is applied to your defaulted student loan
  • Credit reporting companies are notified, which generally means a lower credit score for you

You may not receive additional federal student aid if you are in default on a federal student loan until you take steps to bring your federal student loan out of default.

If you are behind on your federal student loan payments and being contacted by a debt collector, you may be able to arrange repayment options to get out of default.

An income-come driven repayment plan called Saving on a Valuable Education (SAVE) plan has unique benefits that lower payments for many borrowers. Some changes include an interest benefit that went into effect in the summer of 2023, and additional benefits go into effect in July 2024.