What happens if I default on a private student loan?
Lenders can report your default to the credit reporting agencies, which could harm your credit. They make take different actions to collect the debt.
Private student loans often go into default as soon as you miss three monthly payments (90 days). You can also default on a private student loan if you declare bankruptcy, default on another loan, or die.
Private lenders may attempt to collect on your debt directly, or they may hire collection agencies to try to collect on your debt. In addition, they may take you to court.
You should review your private loan contracts carefully to better understand what rights you have if you are worried about going into default. If you have not received a letter from your servicer and you believe you may be in default, you should contact your servicer immediately to discuss repayment options and to determine if it is possible for you to avoid default.
TIP: If you are worried you won’t be able to pay your private student loan, you should contact your lender or servicer as soon as possible. You may be able to negotiate with your lender to set up a repayment plan or otherwise settle your debt.