Manage Your Loans

Communicate with Your Lender

Whenever there’s a change in your life that could impact your student loan, it’s important to notify your lender right away. For example, if you move, be sure to update your address. If you graduate, leave school, or transfer to another institution, your lender needs to know. Keeping your lender informed ensures that you stay on top of your repayment responsibilities and avoid unnecessary issues, like missing a bill and going into default simply because your bill was sent to the wrong address.

Consider Deferment or a Forbearance

One way to avoid default is by applying for student loan deferment or forbearance, which allows you to temporarily postpone your loan payments during times of financial difficulty. However, it’s important to plan ahead. While you're still making regular payments, take time to learn about your deferment options. Even if it’s hard to predict future challenges, notify your lender as soon as you become aware of any circumstances that may affect your ability to pay. This proactive approach gives your lender the opportunity to work with you on alternative repayment solutions and help you stay in good standing.

Make Special Arrangements If You Can

If deferment isn’t an option—or if you’re able to make payments but not at the same amount as before—reach out to your lender to explore alternative repayment plans, such as income-sensitive or income-driven repayment. These plans can make managing your loans much more manageable, especially during periods of financial hardship. Unfortunately, many borrowers default simply because they aren’t aware that flexible repayment options exist. But if you know you could lower your monthly payments to stay on track, why not take advantage of it and avoid the consequences of default?

Consolidate Your Student Loans

Another effective way to avoid default is by consolidating your student loans. If you’ve taken out multiple loans during your college career, you may be juggling several monthly payments, often due around the same time. Consolidation enables you to combine multiple loans into a single loan with a single monthly payment, which can simplify repayment and reduce the risk of missing a due date. In some cases, you may also be able to extend the repayment term, which can lower your monthly payment to a more manageable amount. If high monthly payments have been a challenge, consolidation can be a helpful tool to stay on track and avoid default.

Why do Student Loan Defaults Happen?

Student loan defaults can occur for many reasons. In some cases, borrowers may lack accurate information or don’t have the financial means to make their payments. Others may move without updating their contact information, which can cause them to miss important repayment notices. Some borrowers mistakenly believe that if they didn’t complete their degree or are unable to find a job, they are no longer obligated to repay their loans.

Regardless of your circumstances, student loans must be repaid. If you’re facing challenges, it’s essential to contact your lender or loan servicer to explore alternative repayment options and avoid defaulting on your loan.

What Does It Mean to Default On Your Loan?

When a student loan goes into default, it means the borrower has failed to make payments over an extended period, not just one or two missed payments. Specifically, a loan is considered in default when no payments have been made for 270 consecutive days.

Consequences of Defaulting On Your Loan

You probably already know that defaulting on a student loan is serious, but how serious might surprise you. Consider some of the potential consequences: