Student Loan Default

What Is Student Loan Default?

Student loan default occurs when a borrower fails to make required loan payments for an extended period of time. For most federal student loans, default occurs after 270 days of missed payments.

Defaulting on a student loan can trigger serious financial consequences.

Why It Matters

Student loan default can damage credit scores, lead to collection efforts, and limit access to future financial aid. It may also result in wage garnishment or tax refund offsets.

Understanding default helps borrowers take action early to avoid long-term financial harm.

How Student Loan Default Works

When borrowers miss payments, the loan becomes delinquent. If the borrower continues missing payments for a specified period, the loan may enter default.

Consequences may include:

collection agency involvement
damaged credit reports
additional fees

Borrowers may exit default through options such as loan rehabilitation or loan consolidation.

Example

After missing payments for several months due to financial hardship, a borrower’s federal student loan eventually enters default. The borrower works with the loan servicer to begin the rehabilitation process and restore the loan to good standing.