How many payments do I have to miss before I default on a federal loan? (2024)

FAQs

How many payments do I have to miss before I default on a federal loan? ›

If you continue to miss payments, your loan will eventually enter default. For most federal loans, this occurs after 270 days, or approximately 9 months, although loans are not reported to be in default until they reach the 360th day of delinquency and are sent to collections.

Understanding Default

For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program, you're considered to be in default if you don't make your scheduled student loan payments for at least 270 days.

90 to 120 days

While the exact timing depends on your loan agreement, after a few months of missed payments, your loan will transition from being in delinquency to being in default. Defaulting on a loan means that you're failing to repay the loan per the terms outlined in your loan agreement.

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.

Because you have to make 120 qualifying monthly payments, it will take at least 10 years before you can qualify for PSLF. Important: You must still be working for a qualifying employer at the time you submit your form for forgiveness.

This usually happens if you've missed a number of repayments – usually between 3 and 6. An official default notice will give you 14 days to repay when you owe. If you can't or don't, the company will proceed with registering a default against you.

Delinquency begins the moment you've missed a payment. You'll typically be charged a late fee, and your lender will begin to make collection attempts. You may be considered delinquent for anywhere between 30 and 90 days—and sometimes longer—before the lender considers you to be in default.

If you miss several loan repayments – usually three to six months' worth – you'll get a default notice. You may also face the following if you don't take any action: The lender threatening to repossess your home or vehicle if it's a secured loan. The debt being passed to a debt collection agency.

Defaulting on a loan can result in late fees, debt collection and potential legal action from the lender. It is important to consider your budget and potential future expenses before taking out a loan to avoid defaulting.

What happens if you never pay your student loans? ›

If you default on your student loan, that status will be reported to national credit reporting agencies. This reporting may damage your credit rating and future borrowing ability. Also, the government can collect on your loans by taking funds from your wages, tax refunds, and other government payments.

Do student loans go away after 7 years? While negative information about your student loans may disappear from your credit reports after seven years, the student loans will remain on your credit reports — and in your life — until you pay them off.

Consolidate Your Loans. One way to get out of default is to consolidate your defaulted federal student loan into a Direct Consolidation Loan. Loan consolidation allows you to pay off one or more federal student loans with a new consolidation loan.

How long before a student loan is written off? Unlike in the UK, where student loans are written off after 30 years, the US Department of Education does not automatically write off federal loans after any set period. Without a statute of limitations, borrowers can find themselves stuck paying debts until their death.

If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt relief. If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt relief.

Any month when your scheduled payment under an income-driven repayment plan is $0 will count toward PSLF if you also are employed full-time by a qualifying employer during that month.

The Grace Period

For most federal student loan types, after you graduate, leave school, or drop below half-time enrollment, you have a six-month grace period (sometimes nine months for Perkins Loans) before you must begin making payments.

The length of grace periods can vary depending on the loan type and lender and typically ranges from 30 days to 90 days. Once the grace period is over, your account becomes delinquent.

After your payment is 30 days late, your loan servicer will charge you a late fee up to 6% of the amount due. If your payment is 90 days late, your servicer will report your loan as delinquent to the credit bureaus. After 270 days of missed payments, your loans go into default.