If you’re among the millions of borrowers who haven’t made full, on-time federal student loan payments after the on-ramp period ended Sept. 30, 2024, take action now. Otherwise, your loans may default in July or August.
Once a borrower’s payments are 270 days past due, their student loans default. That status can bring serious consequences, including wage garnishment, damaged credit and lost access to affordable repayment plans.
Nearly 5.6 million borrowers were between 91 and 180 days behind on their payments as of March 31, per Department of Education data. That means they’re at immediate risk of defaulting this summer. These are borrowers who were in good standing before the pandemic but who haven’t gotten back on track since payments resumed.
Five million student loan borrowers already faced default penalties in May. Those borrowers were in default prior to the pandemic.
As a result, a total of 10 million borrowers — about one in four — could be in default this summer, the Education Department says.
With essential costs rising and an increasingly complicated repayment system, many borrowers are finding it difficult to restart student loan payments, says Kyra Taylor, a staff attorney focused on student debt at the National Consumer Law Center. “Right now, it is deeply confusing for borrowers what options they have.”
The good news: You still have time to avert default and get assistance. You may be able to lower your monthly payment to as little as $0 or pause payments entirely while you find your financial footing.
If you’re in a deferment, forbearance or enrolled in the SAVE plan, you may already be protected from default — but it’s critical to confirm your status with your loan servicer.
In this unsteady time for borrowers, here’s what you can do.
Check all of your student loan accounts
Your first step: Log into all of your federal student loan accounts. Start with your studentaid.gov account, which includes information about your loan history and the name of your student loan servicer. Your servicer may have changed since you last made a payment, or you might have more than one servicer — even for loans taken during the same period.
Borrowers with multiple servicers might be up to date with payments through one servicer, but in default with the other servicer without knowing it, Taylor explains.
Once you’ve identified your servicer(s), log into your servicer account(s). Here, you can confirm your loan repayment status and the last time you made a payment.
If you’re delinquent, your servicer should be reaching out to you directly, too — as long as your contact information is up to date in your account.
Servicers start contacting delinquent borrowers by phone, email and mail after 30 days of missed payments, says Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade association for federal servicers. By the time a borrower is 270 days behind, they should have received dozens of servicer calls, he says.
Not sure if those calls are coming from your servicer or a student loan scammer? Hang up, find your servicer’s official phone number, and call your servicer back directly, Buchanan advises.
Learn your options for averting default
You must act quickly to avoid default — but that doesn’t mean you have to start immediately making expensive payments. You have a variety of options to get your loans back into good standing, including formally pausing payments or getting lower bills based on your income.
Sign up for an income-driven or alternative repayment plan
You can choose from three different income-driven repayment (IDR) plans, which cap monthly payments at a certain percentage of your income. Your bill could be $0 if you’re unemployed or earn a very low income.
Each IDR plan has slightly different eligibility rules and repayment terms — but for many struggling borrowers, they will reduce payments compared to the standard repayment plan, Taylor says.
Use the Education Department’s loan simulator to gauge payments under different plans, and apply through studentaid.gov/IDR or by contacting your federal student loan servicer. It might take a while before your IDR application is processed: There’s a backlog of 2 million applications, according to a May 15 court filing.
When you apply to an IDR plan, check that your servicer places you in a “processing forbearance” status, which prevents you from defaulting while you’re waiting for your application to clear, Buchanan says. That status also temporarily pauses payments until you’re approved for the IDR plan.
Besides IDR, two other alternative repayment plans — the extended or graduated repayment plans — may also lower your payments. Or, you can consolidate your student loans to extend the repayment period and reduce monthly bills, Buchanan says. Your servicer can help you navigate these options.
Get temporary relief with a forbearance or deferment
For some borrowers, payments will still be too high under an income-driven repayment plan.
If you’re in that situation, call your servicer and explain why your payments are unaffordable. Mention medical debt, housing costs, child care and other circumstances, Taylor says. You may qualify for a forbearance or deferment.
The downside is that interest may continue to accrue on those loans while they’re in forbearance or deferment, increasing the amount you’ll eventually owe.
But these options can prevent you from defaulting — and they will “buy the borrower some time to rework their budget, to try to start making payments again in the interim, and to work to get over whatever has created a hardship for them,” Taylor says.
Give less likely options a shot
If you’re able to make a lump sum payment to catch up on past-due bills, that could bring your loans back into good standing.
Or check if you qualify for a federal loan discharge program. Those programs may be applicable if your school misled or defrauded you, or if it closed and left you unable to finish your degree program.
Another program, total and permanent disability discharge, may be relevant if you have a physical or mental health condition that prevents you from working.
SAVE borrowers aren’t on track to default
The 7.8 million borrowers enrolled in the SAVE repayment plan haven’t had to make payments since last summer. That’s because they’ve been placed in an interest-free forbearance while legal challenges against SAVE play out.
Being in forbearance can protect you from default, so SAVE borrowers aren’t at risk — even if they haven’t made payments since the on-ramp ended.
Still, it’s a good idea to double-check your status by calling your servicer. If you think you’re in forbearance but aren’t, you could be at risk of default without realizing it.
You don’t have to navigate this alone
The studentaid.gov website has useful information on repayment plans and ongoing litigation impacting student loan borrowers, Taylor says. Researching your options can also help you feel confident when you call your student loan servicer, and make sure the information you’re getting is correct.
When you call your servicer, ask specific questions about your situation, and ask them to walk you through your options to get back into good standing. Borrowers can also use their servicer’s website to accomplish most general tasks, Buchanan says.
