What happens if I miss a student loan payment?
Ever wondered what happens when you miss a student loan payment?
The short answer: nothing good.
The long answer:
When you miss a payment, your account becomes delinquent. You may start to get calls from your loan servicer wondering where your payment is. As you get more and more behind, you'll get more calls.
After 90 days, your loan servicer reports you to the three main credit bureaus. Late payments severely impact your credit rating, which affects your ability to get new credit, qualify for loans and more. Having bad credit makes it much harder to buy a house or a car. It can even make it difficult to sign up for utilities, get a mobile phone or lease a new apartment. Some employers even pull credit reports as part of the hiring process.
If you continue to miss student loan payments for more than 270 days, your account goes into default. Default has all sorts of negative consequences:
- You won't qualify for flexible repayment options
- You won't qualify for forgiveness and cancellation programs
- You won't be able to get new student loans
- Your account goes to collections
- You are fined up to 18.5% of your balance in collections fees
- You could have your wages garnished
- You could have your tax return or other federal benefits withheld
If you miss a student loan payment, it's important to make it up as soon as possible, either via payment, deferment or forbearance.