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What Happens If You Stop Paying Your Student Loans? It’s Not Pretty

What happens if you stop paying student loans? The consequences can be severe and wreck your credit for years.

Broke. Overwhelmed. Frustrated. That’s how a lot of student loan borrowers describe themselves. It’s easy to see why. These payments can be sky-high, and it can be discouraging to see your balance continue to grow with interest charges. 

If you’re like many people, you may wonder, “What happens if you stop paying student loans?” While skipping payments may be tempting, you shouldn’t do it — the consequences are too severe. 

white woman looking at monitor on desk

What Happens If You Stop Paying Your Student Loans? 

If you’re struggling to make ends meet or are simply sick of dealing with your student loan debt and are considering skipping a payment, what happens to you depends on the types of loans you have: 

Federal Student Loans

When you miss your first payment, your loans become delinquent, and the lender can start charging late fees. Federal student loan late fees are generally 6%. If you don’t make your payment for 90 days or more, the lender will notify the credit bureaus that your account is late. A late payment notification can significantly damage your credit score. 

If you keep missing payments, things get worse. Once your account is 270 days late, it is labeled as a defaulted loan and lenders can take the following steps: 

  • They can garnish your wages: Federal loan servicers don’t need a court order to garnish your wages. If you’re in default, they can work with your employer to take a portion of every paycheck to repay the debt you owe. 
  • They can take your tax refund: The federal government can take your tax refund and other federal benefits through Treasury offset. 
  • They can sue you: Your loan servicer can sue you, and you can be charged legal fees and court costs. 
  • They report the default to the credit bureaus: The default will be reported to the major credit bureaus. Having a default on your credit report can make it difficult to qualify for other lines of credit, such as a home loan or car loan. 
  • You lose federal aid eligibility: Once your loans are in default, you’re no longer eligible for other federal financial aid. If you’re planning to go back to school or want to earn another degree, you won’t qualify for aid. 

woman looking frustrated at laptop

Private Loans

What happens if you stop paying private student loans? The consequences are different than if you had federal student loans, but they can still be harsh. Your account generally enters default when you are 120 days past due. When that happens, private lenders can take the following measures: 

  • They can send you to collections: Private lenders will send your account to collections, and you may have to pay costly fees and deal with aggressive debt collectors. 
  • They report the default to the credit bureaus: As is the case with federal loans, defaulting on private loans can significantly damage your credit report and credit scores. This can hurt your ability to get a loan or a credit card in the future.
  • They can sue you: Private lenders can sue you for what you owe. In addition to other consequences, such as wage garnishment, you also could have to pay legal fees and court costs and send your loan to a debt collection agency.
  • They can garnish your wages with a court order: It’s a misconception that private lenders can never garnish your wages. While they can’t do so immediately, they can garnish your wages if they sue you and get a court order. If they file a lawsuit and obtain a judgment, they can garnish a portion of your paychecks. 

How to Avoid Missed Student Loan Payments

Missing your student loan payments can have steep consequences, so you should do whatever you can to stay on track. To prevent missed payments, use the following tips. 

1. Set Up Autopay

Setting up automatic payments is a great way to ensure you pay your loans on time and by their due dates. Your lender will deduct what you owe from your account on your due date, and, as a bonus, most lenders will reduce your interest rate by 0.25%. 

2. Talk to Your Lender

If you can’t afford your payments or are dealing with an emergency that will delay your payment, contact your lender or loan servicer immediately. Depending on the types of loans you have and the policies of your lender or loan servicer, you may be able to postpone your payment through deferment or forbearance. You might also be able to enroll in an income-driven repayment plan that caps your payment based on discretionary income or enter into an alternative payment plan to give you time to straighten out your finances. 

back of Black woman wearing graduation gown and cap

3. Refinance Your Debt

If your current loan payments are too high, consider student loan refinancing. If you have a job and good credit, you could qualify for a loan with a lower interest rate or longer student loan repayment term and lower your monthly payment to a more manageable level. 

For example, let’s say you had $35,000 in student loans at 6% interest. With a 10-year term, your monthly payment would be $389 per month. 

But if you refinanced and qualified for a 15-year loan at 5% interest, your payment would drop to $277 — a savings of $112 every month. 

If you decide to refinance your student loans, sign up with Juno to get access to the lowest student loan refinancing rates available. We use our group bargaining power to negotiate with lenders, and our members qualify for special discounts and other perks. 

Juno's Exclusive Student Loan Refinance Deals

earnest-logoBest for Most


Can’t be refinanced with a cosigner


Fixed starting at 4.99% APR, Variable starting at 5.89% APR including the .25% autopay discount and the .25% Juno discount.

Juno benefit:

Rate reduction of 0.25%


Soft Credit Check to get rates; Hard Credit Check to refinance

splash-financialAlternative Best for Most


May be able to refinance with a cosigner


Fixed starting at 4.96% APR, Variable starting at 4.99% APR. May include autopay discount.

Juno benefit:

Up to $1,000 cash back based on loan amount


Soft Credit Check to get rates; Hard Credit Check to refinance

laurel-roadBest for Medical Professionals


May be able to refinance with a cosigner


Fixed starting at 5.74% APR, Variable starting at 5.49% APR*

Juno benefit:

Rate reduction of 0.25%*


Soft Credit Check to get rates*; Hard Credit Check to refinance

Kat Tretina

Written By

Kat Tretina

Kat Tretina is a freelance writer based in Orlando, FL. She specializes in helping people finance their education and manage debt. Her work has been featured in Forbes, The Huffington Post, MarketWatch, and many other publications.


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