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What Happens if You Don’t/Can’t Pay Student Loan Debt?

student loan debt

The topic of student loan debt is one that is hot in the media right now. Millions of current and former students and advocates are pushing lawmakers to improve the student loan and repayment systems. As it stands, however, broad help for individuals and families facing student loan debt seems to be a political myth.

With so many responsibilities in our day-to-day lives, it is easy to prioritize housing, food, and necessities over student loan payments. In fact, more than 7% of Americans with student loans are currently in default. Unfortunately, ignoring or failing to meet payments can have negative consequences.

What Happens if You Don’t Pay Student Loan Debt?

Whether for financial reasons or because you don’t agree with the repayment process, failing to pay your student loan debt can have very negative consequences. In many ways, defaulting on a student loan has similar consequences to defaulting on any other credit account. But there are some differences given that the federal government backs student loans, not just creditors.

Here is an overview of what you can expect if you stop paying your student loan debt without making arrangements with your loan servicer. Keep in mind that all payments and interest on student loans have been suspended per the U.S. government in response to COVID-19. This suspension is set to expire, however, on August 31, 2022.

1. Your Account Becomes Delinquent

When your student loan payment is 90 days past due, your account becomes delinquent. This is reported to all three credit bureaus, and you may notice a hit to your credit score. This is a subtle change that many people won’t notice immediately. But it becomes readily apparent if you need to apply for credit, apply for a lease or mortgage, or are applying for certain jobs.

Lenders, employers, utility companies, schools – these are just some of the entities that review your credit score before making a decision to hire or approve you.

2. Your Account is In Default

Once your student loan payment is 270 days late, your account becomes officially in default. At this point, the lender can turn your account over to a debt collection agency.

3. Collection Activities Begin

Once a debt collector gets involved, you may find yourself receiving letters, emails, phone calls, and more. Debt collectors are known to use less-than-ethical tactics in their efforts to collect on debts. However, it is important that you know that there are laws governing what debt collectors can do.

The Fair Debt Collection Practices Act (FDCPA) applies to debt collection of student loans. The FDCPA protects consumers from harassing or illegal debt collection practices. It provides very strict guidelines for how debt collectors can attempt to collect debts. It prohibits the following:

  • Calling consumers before 8 a.m. or after 9 p.m.
  • Calling consumers at work after they have been advised not to
  • Contacting family members not listed on the account
  • Abusive or threatening practices
  • Use of profane or obscene language
  • Advertising a debt for sale in order to coerce payment
  • Repeatedly calling the consumer
  • Calling the consumer without properly identifying themselves
  • Making false or misleading representations
  • Falsely representing themselves as an attorney
  • Claiming that the consumer is a criminal or subject to arrest

If you have experienced a debt collector violating the FDCPA, you could have grounds to sue them.

4. Government Intervention

Generally, student loan debt can be resolved through payment plans or other means. But occasionally, the debt remains in default for so long that the government gets involved. When this happens, you could find your tax refund seized or your paychecks garnished. The amounts seized will go directly to the government to pay your student loan debt.

How to Get Ahead of Student Loan Debt

If you are feeling overwhelmed by your student loan debt, you should know that you are not alone. There are millions of Americans currently battling more than $1.6 trillion in student loan debt. This burden is affecting nearly every aspect of American lives. So how do you get ahead of student loan debt?

Here are some tips for how you can take control and avoid default and potential negative consequences:

  1. Calculate the total amount of debt that you owe.
  2. Identify the terms of your debt, such as the interest rates, fees, penalties, and repayment rules.
  3. Review your loans for grace periods, or the amount of time you have after graduating to start paying on your loans.
  4. Look into consolidation. Consolidating your loans could reduce your monthly payment amount and reduce the total number of payments you have.
  5. Pay off higher loans first. The higher the debt balance, the more interest you will pay over time. Paying those off first will reduce the overall total debt amount.
  6. Pay down your principal. Paying extra principal on your loans whenever possible will help lower the debt and reduce the interest you are required to pay.
  7. Set up auto-pay when possible. Many lenders offer a discount if you set up automatic payments from a checking account.
  8. Consider alternative plans, such as graduated repayment, income-based repayment, pay-as-you-earn, and loan forgiveness programs.
  9. See if your lender will defer your payments for a period of time. This can be especially helpful if you don’t have a job immediately after graduating. Government loans often do not accrue interest during deferment, so you may save money here.

There are actually quite a few options available to help you relieve the strain of your student loan debt. Unfortunately, these programs and options are often complicated and not easy to apply for. Loan servicers are also notoriously bad at communicating all the facts and details up front. So it is in your best interests to do some research before selecting any option.

Getting Help With Student Loan Debt

While there seems to be little hope for political help to end the burden of student loan debt, if you are facing mounting debt with no end in sight, there may be other ways to ease your pain. At Daic Law, we can help you review your student loan situation and determine what your best options are for relieving your debt burden.

As a debt defense law firm, we know how lenders, creditors, and debt collectors operate. We also know what your best options are for getting real help that meets your needs in a reasonable and affordable way. To find out more, contact us today by calling 877-893-6040, or by emailing us at

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