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We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence.
Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make Money
The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Rawpixel.com/Shutterstock September 14, 2022 Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy. Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. If you never pay your student loans, your credit score will drop, you’ll have a harder time taking out future credit and you may even be sued by your lenders. The short- and long-term consequences of not paying your student loans can be painful, so it’s essential to pay your student loans on time or seek help if you’re experiencing financial difficulty. Here’s what to know if you’re approaching student loan default. Loan Student Key takeaway Not paying student loans could lead to late fees, a damaged credit score, wage garnishment and more. Speak to your lender about repayment alternatives if you’re struggling to keep up. What happens if you don t pay student loans
Whether it’s your student loan payments or any other debts, if you don’t make your monthly payments, your finances could take hits from multiple angles. Here’s what could happen if you never pay your student loans. The short-term consequences
When you’re even one day late on your student loans, you’re immediately considered delinquent. If you miss a few payments, you might face consequences such as: Late fees. A late payment — one you eventually make but not by the due date — could result in a late payment fee. This amount varies by lender, and not all of them institute this fee, but it’s very common to see either flat late fees or fees that represent a percentage of your missed payment. Withheld tax refund. If you fall behind on federal student loans, the government could until you’re up to date on payments. Wage garnishment. If you’re a few months behind on your student loans, your lender might make moves to — sometimes up to as much as 25 percent of your disposable income. It can do this until you’ve paid back a portion of your loans and are in good standing. The long-term consequences
Loans are considered delinquent immediately after one missed payment, but your lender or loan servicer might not report you as late to the major credit bureaus until you’re 90 days past due. Here’s what can happen the longer you don’t pay your student loans: Default. After several months of missed payments, your loan will enter . The specific timing and consequences of default vary by lender. In extreme cases, the entirety of your student loan balance immediately comes due. Lost eligibility for future aid. If you’re currently in default, you could lose out on any future student aid, including scholarships, grants and federal student loans. Defaulted loans on your credit report could also make it harder to buy a home, buy a car or take out a credit card. Credit score drop. The longer you go without paying your student loans, the more your credit score may tank. Potential lawsuits. Your original lender to a debt collection agency, which can call and send you letters in an attempt to collect a debt. To garnish wages, lenders will need to go through court. You could get sued if you don’t repay your loans. How to get rid of student loans
If you’re struggling to repay your student loans, there are different repayment and forgiveness plans that can help you keep your loans current without breaking the bank. Consider all of your options before choosing the best plan for your needs. Apply for federal student loan forgiveness
President Biden recently announced his long-awaited . All federal student loans are eligible, as are commercially held FFEL loans in default. Individual borrowers who make less than $125,000 annually and married borrowers who file jointly and make less than $250,000 annually can qualify for up to $10,000 in forgiveness, and Pell Grant recipients can qualify for up to $20,000. Some borrowers will receive automatic forgiveness, and all other borrowers will need to apply. Applications will be open through Dec. 31, 2023. Apply for a payment refund
Borrowers who made federal student loan payments during the student loan forbearance period (starting March 13, 2020) may be eligible to get a refund on those payments. Those who think they’re eligible for a refund need to call their student loan servicer and tell a representative that they’re interested in getting a refund on nonrequired payments made during the payment pause. Income-driven repayment plan
If you’re struggling to afford repaying your student loans, you can enroll all of your federal loans into an . There are a few different repayment options based on your needs, but they all have similar methods. With each plan, you’ll make monthly payments based on your discretionary income and family size. After 20 or 25 years, depending on the plan, the remaining balance on your loans is forgiven. You’ll need to update your information every year so your payments accurately reflect your financial situation. Public Service Loan Forgiveness PSLF
is available for federal student loan borrowers who go into a public service career. After 10 years of making payments on an income-driven repayment plan and working for an eligible employer, your remaining debt is forgiven. The Biden administration recently announced to the Public Service Loan Forgiveness program that will expire on Oct. 31, 2022. The temporary changes make it easier to qualify and apply for forgiveness, so now is the time to enroll if you’ve been considering it. Debt snowball or debt avalanche
If you have a mix of federal and private student loans or many different loans, you might want to consider a different approach. Debt elimination plans, like the debt snowball or debt avalanche, might help you chip away at your student loan debt faster. With both of these debt elimination methods, you begin by listing out each debt, including the total amount you owe, your monthly payment, the interest rate and the due date. Next, make minimum payments on all your loans. Here’s where the strategy starts to differ. For the , apply every spare dollar you have toward the debt with the lowest balance. For the , put every spare dollar toward the debt with the highest interest rate. Repeat your chosen action until you pay off the first debt on your list. Then move on to the next-smallest debt (or the one with the next-highest interest rate) and repeat the process until all of your student loans are paid in full. Refinancing
If you have high interest rates or many different student loans, you might want to consider . Refinancing is the process of taking out a new loan to pay off all of your current student loans. You’ll get new repayment terms and a new interest rate, then make one monthly payment to your refinanced loan until it’s paid in full. Note that you can only refinance your loans with private lenders, so proceed with caution. Refinancing federal loans that means you’ll lose , like forbearance, forgiveness or the option to enroll in an income-driven repayment plan. But if you have great credit and can get a lower interest rate than what you’re paying now, refinancing might make sense in certain situations. Student loan settlement
happens when you settle your student loans for less than what you owe. If you’re far behind on your student loans and your credit score has already suffered, this option might benefit you. Keep in mind that you’ll need a lump-sum amount to pay off the outstanding settled balance, and lenders aren’t required to settle. Yet some lenders are willing to consider settling for less if it helps them collect a significant portion of your unpaid debt. Can you discharge student loans in bankruptcy
The U.S. Bankruptcy Code allows for student loans to be discharged if borrowers can demonstrate that not doing so will be an “undue hardship.” However, proving an undue hardship has been shown to be difficult. Borrowers must meet the three guidelines of undue hardship, which is called the Brunner test: You can prove that if forced to repay the loan, you could not maintain a minimal standard of living. You demonstrate that the hardship will continue for much of your loan repayment period. You made good faith efforts to repay the loan before you filed for bankruptcy. It’s technically possible to , and there are currently attempts in the House and Senate to make discharging federal and private student loans easier. However, you should realize that it will be an uphill battle to prove that repaying your student loans will impose an undue hardship on you. 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 themselves will remain on your credit reports — and in your life — until you pay them off. The only way to make your student loan debt go away is to apply for forgiveness and, if necessary, take advantage of the alternative repayment options to help you pay down the remaining balance. The bottom line
Not paying back your student loans can cause catastrophic results for your finances, your credit and your future borrowing prospects, so do your best to stay current on your loans. If you’re struggling, look into federal forgiveness and refund options, find a repayment plan that works for you or refinance your loans. Not paying back your student loans will hurt you for years to come, so the best course of action should be the one that gets you back on track. SHARE: Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy. Chelsea has been with Bankrate since early 2020. She is invested in helping students navigate the high costs of college and breaking down the complexities of student loans. Related Articles