What Happens If I’m Late On A Federal Student Loan Repayment?

Chalk clock and late federal student loan paymentYou may have had every intention to make your loan payments on time, but life happens. Every month you find yourself juggling multiple payments on different due dates while also keeping up with your job commitments and deadlines to pay utility and other bills. With so much happening, loan payments can get lost in the shuffle. You realize only too late that the deadline has passed and you missed a payment on your federal student loan. What happens now?

Consequences of Late Federal Student Loan Payments

When you miss a payment, your federal student loan becomes delinquent immediately. It changes status from current to delinquent the very next day after the missed due date. The loan then remains in delinquent state until you make that payment or apply for deferment or forbearance.

If you do not take any action on your late payment, the delinquency will be reported to 3 major credit bureaus – Equifax, Experian, and TransUnion – after  90 days has passed. This will result in a mark on your credit report, which will make it more difficult for you to get any loans in the future. Even if you do get approved, it will be at higher interest rates.

You will also be charged late fees on your missed payment. The amount you have to pay as late fees is calculated as a percentage of the missed amount.

If you continue to do nothing about your late payment for 270 days, the loan goes into default. In addition to damaging your credit even more and incurring a higher penalty, you could also face legal action when your loan goes into default. The lender may take action to get their payment through wage garnishment or by withholding your tax refunds.

As you can see, if you do not stay on top of your monthly payments, a late payment can quickly snowball into default and then delinquency, which can have long term repercussions.

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How to Recover After That First Missed Payment

If this is your first missed payment, take a deep breath and don’t panic. You can do some damage control if you act quickly. Lenders understand that everyone is juggling multiple personal, professional, and financial obligations and can make a mistake. As soon as you realize you’ve missed a payment, call the lender, explain your situation, and make that payment promptly. This simple action can save you from damaging your credit score and jeopardizing your financial future.

What You Can Do To Avoid Late Payments

Being proactive is the best way to stay on top of your payments and avoid late payments.

The best way to avoid getting into delinquency or worse, default, is to make your payments through auto debit. This involves instructing your bank to debit the amount from your account automatically on a particular date and transfer it to the lender’s account. This ensures that your payments get made on time every month.

An added benefit of choosing auto debit is that most lenders will also reward you by reducing your interest rate. It may be a small reduction but that amount will add up substantially over the term of your loan and is well worth it.

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Lender Rates (APR) Eligibility
Earnest company logo.
Variable APR: 1.88% - 5.64%*
Fixed APR: 2.44% - 5.79%*
Undergraduate and Graduate
Lendkey company logo.
Variable APR: 1.90% - 5.25%*
Fixed APR: 2.49% - 7.75%*
Undergraduate, Graduate, Parent PLUS
Credible company logo.
Variable APR: 1.80% - 9.99%*
Fixed APR: 2.15% - 9.99%*
Undergraduate and Graduate
Laurel road company logo.
Variable APR: 1.64% - 5.65%*
Fixed APR: 2.25% - 5.75%*
Undergraduate and Graduate
Commonbond company logo.
Variable APR: 1.96% - 7.02%*
Fixed APR: 2.59% - 6.94%*
Undergraduate, Graduate, Parent PLUS
Fixed APR: 2.44% - 5.97%*
Undergraduate, Graduate, Parent PLUS
VISIT ISL Education Lending
Variable APR: 1.87% – 5.33%**
Fixed APR: 2.30% – 5.96%**
Undergraduate, Graduate, Parent PLUS
VISIT Nelnet
Variable APR: 2.94% - 4.84%*
Fixed APR: 2.99% - 4.94%*
Undergraduate and Graduate
VISIT College Ave
Variable APR: 1.86% - 6.01%*
Fixed APR: 2.47% - 5.99%*
Undergraduate and Graduate, Parent PLUS

*APR includes a 0.25% interest rate reduction for enrollment in automatic payments.

**Interest rate reduction of .25% for automatically withdrawn payments from any designated bank account (“auto debit discount”). Auto debit discount applies when full payments (including both principal and interest) are automatically drafted from a bank account. The auto debit discount will continue to apply during periods of approved forbearance or deferment if the auto debit discount was in effect at the time of receiving the forbearance or deferment. Auto debit discount will remain on the account unless (1) the automatic deduction of payments is canceled or (2) there are three consecutive automatic deductions returned for insufficient funds at any time during the term of the loan.

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