Here’s What Happens If You Stop Paying Student Loan

The topic of paying back student loans is a stressful one for every student who has accrued debt due to their education. You may be wondering, what are the consequences for not paying back student loans? But most importantly, can you go to jail for not paying student loans? Let’s find out.

In general, you can’t get arrested in connection to or on a warrant for technically not paying your student loans. You will only get arrested for failing to pay after your student loan debt claims have gone to court, you have ignored and failed to show up to court.

The question is how to avoid getting to the point of your student loans going to court to get you to pay? Let’s review how to avoid this and getting arrested, knowing your rights, how your student loans can affect your credit score, and more to help you get back on track to paying your student loans off.

How To Avoid Getting Arrested

As mentioned above, it is extremely rare to get arrested on a warrant for not paying your student loans. It has only happened once or twice in extreme cases where the student has ignored paying back their loans, ignored any claims filed in court, and ignored getting summoned to court to face these allegations.

There are a lot of steps you can take to prevent it from getting this far.

First of all, if you are having trouble paying your student loans you need to contact your loan provider and let them know so you can work something out. If you know you are going to miss a payment, this is called delinquency as soon as you miss the payment.

What delinquency means is that if you do not contact your loan provider in 90 days to discuss a repayment plan, deferment, or forbearance, then they can report it on your credit lowering your credit score.

After delinquency has occurred and you still have not reached out to your loan servicer to discuss repayment options, then this is when your loan goes into “default”.

Default means that you have not paid back your federal student loan in 9 months and your private student loan in 120 days or 3 missed payments. Once you have reached this point, 3 things can happen.

Loan Defaulted?

These 3 things are most likely to happen next:

  1. Your wages may be taken from you if you are working without a court order
  2. You could not get your tax return back or social security check
  3. Credit agencies may be notified of your lack of repayment and it could greatly hurt your credit score

Fixing Defaulted Loans

So, what to do if your loan has gone into default? You have 3 options which are:

  1. Repayment, since your loan has reached default this means you must pay back the loan in full amount, of course most people cannot manage this so you may try negotiating a student loan settlement
  2. Rehabilitation, this is when you must make 9 payments within 10 consecutive months, this will usually be 15% of your income, but you can only choose this option once, this is usually the best option to consider
  3. Consolidation, for this option you need to make 3 payments, on time and enter into a new agreement of paying back your loan under a plan based on how much you make, this option though can end up taking a long time and you might end up paying a lot more in interest

Keep in mind, this may be different depending on who you have gotten your loan with, either a private loan or a federal student loan, make sure to check with your specific loan lender.

What happens if I default on a federal student loan? | Consumer Financial Protection Bureau (

Know Your Rights

You have rights when it comes to paying back your student loans, and if you know them, the more empowered you can be in making decisions in regards to repayment and such, these basic rights are:

  1. Right to loan counseling:
  2. Right to contact your loan provider
  3. Right to forbearance
  4. Right to consolidate loans
  5. Right to repay early
  6. Right to defer payment
  7. Right to pay based on your income
  8. Right to reschedule payments
  9. Right to deduct interest
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Credit Score & Student Loans

To keep or fix your credit score and your loan has gone into default, the rehabilitation option is best as it is the only option that will remove the default from your credit report, though previously missed payments may still remain.

A drop in your credit score can possibly trigger your other debts to increase in interest.

Federal Vs Private Student Loans

If you have not applied for student loans yet, here are some important things to consider when deciding between getting a federal student loan, given out by the federal government or a private student loan given out by a bank or another financial institute.

Federal student loans have lower fixed interest rates and do not necessarily depend on the student’s loan history. Federal student loans are often the way to go as they are overall less expensive and they do offer better repayment options. For federal student loans, you will need to apply for FAFSA which will determine how much of your loan will be unsubsidized or subsidized.

Private student loans oftentimes do depend on the student’s credit score and usually have variable and or fixed interest rates. Private student loans may also need you to have a co-signer with somewhat good credit.

This tool can help you decide out of a few loans which one might best fit your needs Loan Comparison Calculator (

If you are struggling with repayments, know you are not alone. There are over 44.7 million people in the United States who are in debt and struggling with repayments as well, that is about 1 in 4 people.

Know your options when it comes to loans and know your rights.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily represent those of the College Reality Check.

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