What happens if you can't pay your student loans
Federal student loans are the most flexible debt most people carry. Income-driven repayment can lower a payment to a fraction of the standard amount, sometimes to zero, and deferment and forbearance exist for hardship. Private loans are far less flexible, so identify which type you have before doing anything else.
The real timeline
- Step 1 · Day 1
The payment is late. Federal loans generally do not report a missed payment to credit bureaus until 90 days.
- Step 2 · 90 days late
Delinquency is reported to the credit bureaus on federal loans. Private lenders often report sooner.
- Step 3 · 270 days late
Federal loans generally enter default at 270 days of nonpayment.
- Step 4 · After default
Federal loans can lead to collection costs, wage garnishment, and offset of tax refunds or federal benefits, without a court judgment. Private lenders must sue to garnish.
Protections and options
- Federal borrowers can apply for an income-driven repayment plan, which sets the payment based on income and family size and can be as low as $0.
- Deferment and forbearance can pause federal payments during hardship. Interest may still accrue, so ask.
- Federal loans in default can often be restored through rehabilitation or consolidation. Ask your servicer about both.
- Applying for IDR is free at StudentAid.gov. Never pay a company to do it for you.
What to say when you call
Hi, I cannot afford my current student loan payment. Are my loans federal or private? If federal, I want to apply for an income-driven repayment plan — please tell me which plan gives the lowest payment for my income and how to submit it. If I need time while it processes, what deferment or forbearance is available, and does interest keep accruing?
Write down the name of the person you speak with, the date, and the agreement. Ask for confirmation by email.
This is one bill. What about the rest?
Bill Rescue ranks everything you owe by real risk of shutoff, repossession, or collections, then builds a 7-day plan around the cash you actually have.
Build my rescue planCommon questions
Can my wages be garnished for student loans?
Federal loans in default can lead to administrative wage garnishment and tax refund offset without a lawsuit. Private lenders must sue and win a judgment first.
Should I pay student loans before rent?
No. Housing, power, and transportation come first. Federal loans have flexible options precisely because they can wait.
Is income-driven repayment free to apply for?
Yes, applying at StudentAid.gov is free. Any company charging a fee to enroll you is charging for something you can do yourself.
Where to read more
Bill Rescue is an educational tool, not financial or legal advice. Rules vary by state and by creditor. See our disclaimer.