What Can Happen If You Do Not Repay Your Student Loans?

Consequences of Non-Payment or Default Can Be Heavy

College students talking in the library

The crushing debt taken on by Americans in order to get college degrees is having a huge impact on our economy and on our national politics.


On Tuesday, Nov. 22, 2022, the Biden administration extended the pause on payments and interest on federal student loans for the eighth time. Borrowers with federal student loans won’t have to make payments, and loans won’t resume accumulating interest, until 60 days after court cases challenging Biden’s student loan forgiveness program are resolved or the Department of Education is allowed to move forward with the program. If the cases aren’t resolved by June 30, 2023, payments will resume two months after that.

As of the second quarter of 2022, $1.59 trillion student loan debt is outstanding. In 2019, before the payment pause, 44% of borrowers were actively attempting to make payments. Among borrowers with outstanding debt, 12% were behind on their payments as of 2021.

If you are considering taking out student loans, or have already taken them out and are struggling with repayment, here are some things you need to know about the consequences of non-payment.

Key Takeaways

  • If you are struggling to pay off your student loans, depending on the source there may be multiple repayment consolidation plans available.
  • Interest accrual and payments on Federal student loans have been temporarily paused.
  • Delinquency refers to a payment that is late, and this status elevates to default after 270 days.
  • Consequences from failing to pay off your student loans can be severe, and have long-lasting effects in other areas of your life.

Federal and Private Student Loans Are Different

That $1.56 trillion refers only to debt taken on by students or their parents who took out federal student loans. Some additional debt is owed to private banks and other lenders.

These private loans are collected in a totally different manner and there could be fewer forms of recourse available if your loan is private rather than public.


On Aug. 24, 2022, President Joe Biden announced via Twitter the cancellation of $10,000 of federal student loan debt for eligible borrowers, and $20,000 for federal Pell Grant recipients.

Consolidation and Repayment Plans Are Available

If you have problems making payments on your federal student loans, be aware that they can be combined into one loan to make repayment easier.

There are also a number of income-based repayment plans, which can give borrowers more time to repay their loan, reducing the financial burden.


On Aug. 24, 2022, President Joe Biden’s administration proposed a new plan for federal student loan repayment for undergraduate loans. The plan would cap monthly payments at 5% of your monthly income. After 10 years, whatever remaining balance you have would be eliminated if the original loan balance was $12,000 or less.

The Difference Between Default and Delinquency

A loan becomes delinquent on the first day after a payment due date is missed. There are several stages of delinquency, including 30 days past due, 60 days past due, and 90 days past due.


Each level gets a little more serious. The loan does not go into default until much later, which could be at least 270 days (or nine months) of no payments, depending on the type of loan.

Borrowers whose loans are delinquent still have a number of repayment options. Default kicks a series of responses into action which are much more difficult to resolve.

The Initial Consequences of Default

Once a loan is considered to be in default, the consequences can be severe. The entire unpaid balance plus interest becomes immediately due and payable.

Borrowers lose any eligibility they might have had for deferment, forbearance and other repayment plans. They will not be eligible for any future federal student aid, and the loan account will be turned over to a collection agency.

The Long-Term Consequences of Default

There is no statute of limitations on the collection of federal student loan debt. Although the government may forgive student loans in certain cases, this does not apply to loans in default. Here are a few areas affected by defaulting on student loans:

  • Credit score: This information will be reported to the credit agencies and will affect the borrower's credit rating. That hurts the person's ability to borrow money or even get a job in the future.
  • Government payments and wages: The government can also withhold federal income tax refunds, garnish wages, or withhold Social Security payments to settle the debt.
  • Career and licensure: Depending on how efficient the government is in updating its electronic records, it can affect a person's ability to renew a driver’s license or professional license and even prevent the borrower from enlisting in the Armed Forces.

To make matters worse, the amount of total debt keeps growing. There are additional interest costs, late fees, potential attorney fees, court costs, collection fees, and other costs associated with the collection process which can be added to the amount owed.

Penalties Can Get Serious

The borrower can be sued and taken to court for non-payment.

Once an unpaid loan starts moving through the court process, the judge may issue certain orders. Although a borrower cannot be arrested solely for non-payment of a loan, an arrest warrant can be issued if a judge's orders are not followed.

There may be additional charges if it is determined that fraud was involved in the initial loan application or false information was provided.


Default can affect other people as well. Any co-signers on the original loan will be pursued for repayment. It can even damage the prospects of the borrower’s children when they in turn apply to take out student loans to pay for their own education.

Frequently Asked Questions (FAQs)

How do you get student loans forgiven?

Your options may be limited for private loans, but there are several forgiveness programs for federal student loans. For example, you may qualify for Public Service Loan Forgiveness if you work for a nonprofit or federal, state, local, or tribal government. Check the Federal Student Aid's list of loan forgiveness programs to see which ones you may qualify for.

How do you consolidate student loans?

One way to consolidate federal student loans is with a Direct Consolidation Loan. Log into your Federal Student Aid account and apply online. Private loans can be consolidated by applying for a debt consolidation loan with a bank or another lender.

What happens to student loans when you die?

Federal student loans are discharged upon the borrower's death. This includes any PLUS loans taken out by a parent—the loan can be discharged if that parent dies.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Department of Education. “Biden-Harris Administration Continues Fight for Student Debt Relief for Millions of Borrowers, Extends Student Loan Repayment Pause." 

  2. Federal Reserve Bank of New York. "Quarterly Report on Household Debit and Credit 2022: Q2" Page 2.

    1. Board of Governors of the Federal Reserve System. "Report on the Economic Well-Being of U.S. Households in 2021 - May 2022."
  3. Twitter. “@POTUS, Aug. 24, 2022 at 11:32 a.m.

  4.  Department of Education. “Biden-Harris Administration Announces Final Student Loan Pause Extension Through December 31 and Targeted Debt Cancellation To Smooth Transition to Repayment.”

  5. Federal Student Aid. "Student Loan Delinquency and Default."

  6. New York State Higher Education Services Corporation. "Defaulted Student Loans FAQs."

  7. Consumer Financial Protection Bureau. "What Happens If I Default on a Federal Student Loan?"

  8. The Pew Charitable Trusts. "Student Loan Default Has Serious Financial Consequences."

  9. Federal Student Aid. "Discharge Due to Death."

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