The affordability of student loan payments is no stranger for many recent graduates and the risk of missing a student loan payment can be high. Over 3 million Direct Loan borrowers were one month (or more) behind on the payments—having an official delinquent status as of December of 2018. Being delinquent on your student loans can lead to late fees, penalties, and a negative impact on your credit.

Consequences for missing a student loan payment aren’t just limited to the tradition punishments of late payments—there can be additional repercussions for borrowers.

Missing A Student Loan Payment—The Full Consequential Picture

As mentioned, if you miss a student loan payment, you’ll get a late fee tacked on to your total balance due and there is a likelihood that the late payment will be reported to one or more of the credit reporting agencies. Consequences for missing a student loan payment aren’t just limited to the tradition punishments of late payments—there can be additional repercussions for borrowers such as wage garnishments or tax refund withholding.

30 Days Late

Continual missed payments can lead to more severe action being taken. After 30 days has passed your due date, the loan servicer in charge of your loan management can begin to charge up to 6% of your minimum payment required.

90 Days Late

Your missed payments have been reported to the credit agency, and with student loans, they stay on your credit report for seven years. A reported late payment can impact your score by as much as a 100-point reduction.

270 Days Late (or 120 for private loans)

At this point, your student loan has defaulted and enters collections. This can trigger additional fees, garnishment of your wages, or income tax offset. Income tax offset is when your income tax return is seized and applied to your federal student loan balance.

After 270 days. Your federal student loans will enter default. This triggers potential new penalties, like collection costs, wage garnishment and tax refund seizure.

Avoiding Late Student Loan Payments

Missing a payment isn’t always a forgotten task; sometimes it is due to financial instability. Choosing between paying your student loan or your rent or groceries. If you forget to make your payment, you should make it as soon as possible to reduce the risk of major consequences. Enrolling in auto pay may be an ideal solution, and some loan servicers may offer a small discount or drop in your interest rate if you do.

If affordability is your concern, the reconsidering your loan repayment option may be best. Contact The Student Loan Advisory Group to see if you qualify for an income based repayment option. Some individuals qualify for payment amounts as low as ZERO dollars! There may be other programs, those for student loan debt forgiveness, deferment or forbearance, or cancellation may also be an option.