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What happens when you miss a student loan payment?

Maybe you forgot about it. Or you just don't have the money to cover it right now. Whatever the case, act quickly.

You might manage to salvage the situation and avoid having your credit score take a hit. It pays to reach out to your lender and explore your options as soon as you miss a student loan payment.

The problem with missing a student loan payment

Once you miss a student loan payment, your account will be marked as delinquent. At that point, you may be subject to penalties and fees associated with being late. The extent of these penalties depends on your lender.

Furthermore, missing a student loan payment could also put your credit score at risk. If you took out federal student loans, your delinquency won't appear on your credit report until you're more than 90 days late. But private lenders might report that delinquency sooner.

Once that information is added to your credit record, your credit score might take a serious dip. And if that happens, you might struggle to get approved the next time you apply for another type of credit. That includes credit cards and personal loans.

Fixing the problem

Once you miss a student loan payment, the most important thing to do is reach out to your lender. If you skipped that payment by accident and it's already on its way, being a touch late probably won't hurt you. Your lender might note that your payment is in progress and call it a day.

If you missed that payment because you couldn't swing it financially, and you still can't pay, discuss that fact with your lender. Ask them what options you have. Federal loans may be eligible for deferment or forbearance. Both options give you a break from paying your loans until you're in a better place financially.

If you took out private loans for college, let your lender know that you're experiencing financial hardship. You may have a few options. Some private lenders will also let you defer your loan payments for a period of time, though you might face additional fees.

Avoiding future late payments

To avoid falling behind on your federal loan payments, look at getting an income-driven repayment plan. This recalculates your monthly loan payments as a reasonable percentage of your income. Doing so should lower your future payments so you're less likely to skip them due to money-related constraints. A private lender might also agree to rework your monthly payments so that they're more manageable. Or they might not. But it’s beneficial to have that conversation.

At the same time, it pays to create a budget to ensure that you're able to keep up with your various monthly bills, including student loan payments. Finally, set up a calendar reminder for your loan payments due dates or set up autopay from your checking account. You'll avoid being late in the future due to basic human error.

We all make mistakes. Missing a student loan payment isn’t the end of the world. But it can be damaging if you don’t deal with it right away. Make sure to take steps to fix the problem and avoid future late payments to prevent serious consequences.