The average student loan debt among recent graduates is nearly $30,000, according to the Federal Reserve, with monthly payments hitting $300. Borrowers with graduate school loans have even larger payments to manage.
A survey sponsored by the Institute for College Access and Success found that 42% of student loan borrowers have to decide between making a monthly payment, and 20% are currently in either delinquency or default.
Major adjustments to federal student loans take effect July 1, 2026 — including stricter limitations on deferment and forbearance, the end of some income-based payment plans, new caps on Parent PLUS loans and the elimination of Grad PLUS loans.
Those changes will make it even harder for borrowers to pay off loans or avoid taking out pricier private student loans, raising the risk of defaulting.
Find the right lender for student loan refinancing
What does it mean to default on student loans?
There are three phases to the default process for federal loans.
- After one day of non-payment: One day after you miss a payment, your loans are considered delinquent and you may be charged late fees.
- After 90 days of non-payment. Your servicer will report your account as delinquent to the three main credit bureaus, which means it will appear on your credit report and lower your credit score.
- After 270 days of non-payment. The loan is officially in default, and the debt could be sent to a collections agency.
Private loans will fall into default much faster, usually after 90 to 120 days of missed payments.
What happens if you default on a student loan?
Defaulting on a federal student loan has serious consequences.
- Your credit score could drop by as much as 175 points
- You'll lose access to additional federal student aid and access to protections like income-based repayment plans, deferment and forbearance
- Your wages, tax refund and Social Security could be garnished until the debt is paid
- Your loan servicer could sue or seize assets to collect on the debt
Private lenders have their own rules and usually lack the protections that come with federal loans. Late payments are subject to fees and reported to credit bureaus and third-party collection agencies. If they sue and win, they can seize assets, put a lien on your house and garnish your wages.
How do I get out of default on my student loans?
You'll be in a much better position if you talk to your loan servicer before you actually fall into default.
Options for federal student loans include income-driven repayment plans, changing your monthly payment date, streamlining repayment through a Direct Consolidation Loan or requesting deferment or forbearance.
You can also consider refinancing. Refinancing a federal loan into a private one will remove protections like deferment or forbearance. But if your credit score has improved considerably since you took out your loan, you may be eligible for a much better interest rate. (Rates for federal undergraduate student loans in the 2025-26 academic year are set at 6.39%.)
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
Undergraduate and graduate students, parents, health professionals
$5,000 minimum (or up to state); maximum up to cost of attendance
5, 7, 10, 15, years; up to 20 years for refinancing loans
Terms apply.
Undergraduate and graduate students, parents
Amount varies by individual lender
Range from 5 to 20 years
Terms apply
Refinancing private loans also allows you to streamline multiple loans into one monthly bill, remove a co-signer and switch from a variable to a fixed rate.
Student loan FAQs
How do I know if my student loan is in default?
Default typically occurs after 270 days of non-payment. You can check your dashboard on the Federal Student Aid site or review the "Loan Breakdown" section for any loans listed as in default. For private loans, check with your lender.
Do student loans affect your credit score?
Federal student loans don't require a credit check, so your score won't take a hit when you apply. Private student loan lenders do check your credit when you apply, which can temporarily lower your credit score a few points.
On the one hand, having student loans can diversify your credit mix, which accounts for 10% of your FICO Score. But they'll also increase your debt-to-income (DTI) ratio, which can hinder your ability to qualify for other loans.
The biggest impact to your score is if you fall behind on payments, which can cause your score to drop by as much as 175 points.
Can I refinance a refinanced student loans?
There is no limit on the number of times you can refinance student loans. Each application will require a hard credit check, so your credit score will be slightly impacted.
