Nearly 3.2 million student loan borrowers are at least 30 days behind on their payments as of the second quarter of 2019, according to Department of Education data. But the number of student loans in delinquency is likely much higher.

Why? Because any loan even a day late is delinquent. But that doesn’t mean you've ruined your credit if your payment is a little late -- or that debt collectors will soon be knocking at your door.

A man looking stressed while staring at his laptop.

Image source: Getty Images

The effect of a late student loan payment depends on your student loan servicer and how late the payment is. There are ways to get out of delinquency once you get into it, but it’s best to avoid it altogether if you can. Here’s everything you need to know.

The age of the late payment matters a lot

Technically, your loan is considered to be in delinquency if you miss the due date by even one day. But your lender probably isn’t going to do anything about it right then. Most won’t do anything until your payment is at least two weeks overdue. If you pay before then, the lender will remove the delinquency status from your account and it’ll be in good standing again.

As the late payment ages, the consequences begin to stack up. Here’s what you can expect if you make a federal student loan payment late:

  • 30 days late: Your loan servicer may charge you a fee of up to 6% of the missed payment. If you made a partial payment, it will only charge a fee on the outstanding missed amount. If you paid late on multiple loans or have multiple payments that are 30+ days late, you’ll pay this fee for each late payment.
  • 90 days late: Your loan servicer will report your late payment to all three credit bureaus. A single late payment can drop an excellent credit score by more than 100 points, making it harder to secure loans and credit cards in the future. It might also affect your ability to get a job, a new cell phone plan, or an apartment. Late payments stay on your credit report for seven years.
  • 270 days late: Your loan is now in default. Your entire unpaid balance immediately comes due and you lose your eligibility for benefits like deferment and forbearance. This will damage your credit even further and your loan servicer could garnish your wages, seize your tax refunds or other government benefits, or take you to court.

It’s not a pretty picture. Fortunately, not all delinquent borrowers go into default. But it still happens to hundreds of thousands of graduates every year.

Late payments on private student loans

Private student loan lenders follow more or less the same process described above, but their timeline and fees might be a little different.

They might charge a late fee after your payment is only 15 days late, for example, and they might bill a standard fee rather than a percentage of the missed payment. They might also report your late payments to the credit bureaus after as little as 30 days. Some private loan lenders define default differently, too. They can start garnishing your wages after just 120 days if you don’t pay up.

You can figure out how your private student loan lender defines delinquency and default and the consequences you can expect by reading through your loan agreement. If you have any questions, reach out to the loan servicer directly for more information.

What to do if you’ve missed a payment

You should always call your loan servicer as soon as you realize you’ve missed a payment. Own up to your mistake. If you’re going to pay within the next few days, be sure to inform your lender.

If your payment is going to be 30 or more days late, you can try requesting that the loan servicer not charge you a late fee. This may work if you’ve been a good payer up until that point, but your servicer is under no obligation to do so. 

Rework your budget if you need to free up the cash for your student loan payment. But be careful not to take on other types of debt in the process by, say, charging a bunch of your living expenses to your credit card so you can save your cash for your student loans. That’s just trading one financial problem for another.

Hopefully, you can take care of the problem before you end up in default. If you default on your federal student loan, though, there are ways out. You can repay your loan in full, although this isn’t feasible for most borrowers. Or you can try loan rehabilitation or consolidation.

Loan rehabilitation requires you to make a series of nine on-time monthly payments over 10 consecutive months. The payments are based on your income level and set by your loan servicer. This will make you eligible for new federal student loans, deferment, and forbearance again. You’ll also have your choice of all federal student loan repayment plans and your loan servicer will remove the default from your credit report, although any late payments will still be there. You can only rehabilitate a defaulted loan once.

Loan consolidation is when you take out a new student loan to replace several others so you have a single monthly payment. You can use this strategy to get your federal student loan out of default. But if you want your choice of federal student loan repayment plans, you must agree to an income-driven repayment plan and make three consecutive, full, and on-time payments before you consolidate the defaulted loan. Otherwise, you'll be limited to one of the income-driven options.

Consolidating a defaulted loan will stop wage garnishments and collection calls, but it won’t remove the default from your credit report.

Avoiding student loan delinquency and default

You’re better off avoiding student loan delinquency and default whenever possible. Budget some money from each paycheck toward your student loan debt and set up automatic payments if you struggle to pay on time each month. If your lender doesn’t allow for that, set reminders for yourself so you remember to pay.

If you can't keep up with your federal student loan payments, try switching to a different repayment plan. Income-driven repayment plans base your monthly payments on your income, so they may fit into your budget more easily than the standard repayment plan -- although you might pay more in interest overall. Private student loans often don’t allow income-driven repayment plans, so you might have to go straight to the next step if you can’t keep up with these loans.

When you can’t afford to make any student loan payments, deferment or forbearance can help keep you out of delinquency or default. These options halt your student loan payments for a set amount of time.

Deferment typically has stricter criteria, while forbearance is up to the judgment of your loan servicer. Common reasons for pausing payments include being in school, temporary financial hardship, a medical emergency, or active-duty military service.

If you have subsidized federal student loans, the government will pay the interest during deferment, but not forbearance. For unsubsidized federal loans, you're responsible for the interest in either case. Private student loans may offer deferment or forbearance, but their terms usually aren’t as flexible as federal student loans.

You could also try refinancing or consolidating your student loans for a lower interest rate. Federal student loans offer the same interest rates to all borrowers, but private student loan lenders base their rates on your creditworthiness. If you have good credit, you might be able to secure a better deal. But don’t just look at cost. Pay attention to the repayment options, fees, and opportunities for deferment and forbearance too, especially if you think you might struggle to keep up with your payments.

Missing a student loan payment might not be a big deal if you forgot and were only a few days late. But, if you were late because you couldn’t afford to make the payment, your mistake could haunt you for decades. Try some of the above tips to avoid loan delinquency and default (or to get your federal student loans out of default if they’re already in it) and minimize their effect on your credit and your financial security.