I’m Late With My Student Loan Payment, Now What?

Renee Layberry
May 4, 2021

It’s 3 a.m., and you’re fast asleep. Suddenly, you sit straight up in bed your heart pounding and remember you didn’t make your student loan payment this month. What do you do?   Well, first of all, go back to sleep. As soon as you get up, you can get to work on fixing this oversight. Keep reading for more information about how to handle a missed student loan payment and how to ensure that you’re never late again.  

What do I do when I forgot to make a payment?

Your loan payment is considered late if it is one day or more overdue. That doesn’t give you much wiggle room. As soon as you realize you are (or will be) late making that payment, call your loan servicer.   A loan servicer is the company assigned to handle your federal student loan. You’ll be assigned one as soon as your loan is disbursed. If you don’t know who your loan servicer is, log in to the federal student aid website to check your account details.   When you speak to your loan servicer, see if they can waive any late fees. They usually will if you have an otherwise solid track record of punctual payments. At the very least, they can take your payment information over the phone so that you won’t accrue additional late payment fees or penalties.   Who you contact to discuss a late payment depends on the kind of loan you have: a Federal Direct loan, a Perkins loan, or a loan from a bank or private company.   Photo by Cari Dobbins

Federal Direct loans

If you can’t log in to your account or find loan servicer information, you can call the Federal Student Aid Information Center directly at 1-800-433-3243.  

Federal Perkins loans

If you have a Federal Perkins loan, contact your school’s financial aid office and ask to speak to a financial aid counselor.  

Private loans

If your student loans are from a bank or other private company, find a toll-free number on their website you can call to speak to an account representative.   Even if your loan payment is late because you don’t have the money to pay it, you still need to make that call to your loan servicer to discuss your options moving forward. It’s tempting to ignore your student loan, hoping it will go away but that’s the worst thing you can do.    If your loan becomes delinquent, you’ll have a lot of long-term financial problems that will follow you for years.  

What happens when my loan becomes delinquent?

The first day after you don’t meet a payment date, your student loan becomes delinquent, or past due. It remains that way until you repay the past due amount plus any charges.   If you fail to make your student loan payments, your loan will remain delinquent for 90 days. During that time, you’ll be accruing late fees along with the usual interest. After 90 days, your lender will report your delinquency to the three major national credit bureaus: Equifax, Experian, and TransUnion.   Once you have delinquent student loan payments on your credit report, you’ll likely have trouble when you wish to:   Photo by Susan Sewert

What happens if I default on my student loans?

Depending on your loan type, your delinquent loan status may turn into default status. For Direct loans, you have 270 days (so about nine months) before your loan defaults. For a Perkins loan, your loan holder can declare default as early as one day after a missed payment. That’s unlikely, of course, but you should be aware that your loan holder has that option.   If you default, your loan goes into acceleration, which means that the entire amount becomes due immediately. So now, instead of having monthly payments, you have massive unpaid debt. In default, you cannot take advantage of temporary relief such as pausing your payments, or starting a new repayment plan.   You will also face several other serious consequences:
  • You will no longer be eligible for any federal financial aid to further your education.
  • Your wages may be garnished.
  • Any tax refunds or other federal benefits can be withheld.
  • Your college may withhold your transcript.
  • You could end up in court.
  If you default on your student loans, contact your loan provider as soon as possible. You may be able to work it out, but know that your credit report will be in poor shape for a long time. Still, it’s far better than continuing in the default process.   Loan providers don’t want you to default any more than you do, so they are motivated to help you before it gets to that point. If you simply don’t have money to make your loan payments, you do have options. You just have to make the first step.   person calculating bills and using a calculator Photo by @TatianaMara via Twenty20

What if I just don’t have the money to make my loan payments?

If you find yourself short of cash, you have several options to keep your loan out of delinquent status. All of these options start with contacting your service provider first. You’ll get the best results if you are honest about your situation.   Let’s talk about three options you can discuss with your loan servicer.  

Option 1: Ask for a deferment or forbearance on federal student loans

You may be eligible for loan deferment. That means that you don’t have to make any loan payments for a specified length of time.    If you have Direct Loans, you will keep accruing interest costs over that time. You can pay or capitalize those costs, which means the amount gets added to your total loan (and costs more in the long run). Some loans will stop charging interest while you are in deferment.   You may be eligible for loan deferment if you meet any of these criteria:
  • You're going to graduate school.
  • You are undergoing cancer treatment.
  • You're unemployed.
  • You are serving in the military.
  • You can demonstrate economic hardship.
  After you request a deferment, you will need to make payments until you are officially approved.   If you don’t qualify for a deferment, you may be eligible for student loan forbearance, which also provides a break from your payments – if you meet any of these criteria:
  • You're an AmeriCorps member.
  • You are teaching at a public school that serves a low-income population.
  • You're in the National Guard.
  • You are doing a medical or dental residency.
  • Your loan payments for the last three years have equaled 20% or more of your gross income.
  In forbearance, your loans will continue to accrue interest except in unusual circumstances. Currently, most federal student loans are in administrative forbearance until September 30, 2020, because of the coronavirus.   Photo by luxstorm

Option 2: Apply for loan rehabilitation

If you qualify for loan rehabilitation, you agree to make nine payments, set at a rate you can afford, within 20 days of your monthly due date for ten consecutive months.   The amount you pay is determined by your salary minus 150% of the poverty level for your family size and your area. The remaining amount is your discretionary income. Your loan payment will be 15% of that number. If you make less than 150% of the poverty level, your payment could be as low as $5.   After those nine payments in ten months, your loan will be moved out of default status, and your default record will be removed. It will still appear on your credit report, but you won’t end up in court.  

Option 3: Consolidate your federal student loans

If you have several federal loans, you may qualify for loan consolidation. Consolidating your federal student loans means you’ll have one monthly loan payment, instead of several.   Plus, you’ll have longer to pay off the debt: The loan period can be extended to as much as 30 years. You may also be able to switch to a fixed interest rate (instead of variable) and have access to income-driven repayment plan options as well as loan forgiveness.  

How can I make sure I pay on time?

Life gets busy, and it’s easy to forget things. One of the best ways to ensure you don’t forget a loan payment is to sign up for autopay. The lender gets the payment directly from your bank on a set day. As a bonus, most lenders provide a slightly reduced interest rate (usually around .25%) for autopay.   Plan ahead, and you’ll never wake up in a cold sweat about your school loans again!