How Can I Avoid Student Loan Default?

Defaulting on your student loans will damage your credit, since late payments stay on your credit report for seven years. If possible, it’s important to avoid entering default in the first place.

To keep your loans current, follow these tips:

1. Opt for an Income-Driven Repayment Plan

If you have federal student loans and are having trouble affording your monthly payments, apply for an income-driven repayment (IDR) plan. Under an IDR plan, the loan servicer will extend your repayment term and base your monthly payment on your family size and discretionary income. After 20 to 25 years of making payments, the remaining loan balance will be forgiven.

2. Apply for Deferment or Forbearance

If you have federal loans and are experiencing a financial hardship or medical emergency, you can apply for a deferment or forbearance. Either of these options lets you temporarily postpone payments.

As part of the CARES Act, the U.S. Department of Education placed federally owned student loans into administrative forbearance. Most federal loan payments are automatically suspended until October, 2023, and you’ll be charged no interest until September 1, 2023.

3. Stay in Touch With Your Lender

If you have private student loans, you’re ineligible for federal IDR plans, deferments and forbearance. But many private lenders offer temporary hardship programs for borrowers who have lost their jobs or are going through other emergencies. For example, the following lenders offer forbearance policies and alternative payment plans:

  • Ascent Student Loans: Borrowers can qualify for up to three months of forbearance at a time, for up to four consecutive periods. You can get up to 24 total months of temporary hardship forbearance during the life of your loan.
  • Education Loan Finance: If you cannot repay your loan because of a financial hardship or medical difficulty, you may qualify for forbearance for up to 12 months.
  • Sallie Mae: You can postpone your payments for up to three months at a time, for up to 12 months over the life of your repayment term.

Contact your lender right away to explore the repayment options available.

4. Set Up Auto-Pay

To minimize the risk of missing payments, set up automatic payments so that the money is withdrawn from your bank account on the payment due date. You not only won’t need to worry about manually paying your student loans, you also may qualify for an interest rate reduction. Many lenders offer a 0.25 percentage point discount for borrowers who sign up for auto-debit.

5. Develop and Stick to a Budget

Create a budget to ensure you know how much money you earn each month and how much you spend. If money is tight, identify areas where you can cut back to free up extra cash. Or consider picking up a part-time job or side hustle so you have more money to pay off student loan debt.

6. Review Your Credit Report

It’s possible you took out several student loans to pay for college. Over time, your loans can change hands, as lenders sell your loans to different companies, or your loans are transferred to new loan servicers. To make sure you don’t lose track of them, check your credit report regularly.

Typically, you can view your credit report from each of the three major credit bureaus—Equifax, Experian and TransUnion—once per year at As a response to the coronavirus crisis, the three credit reporting agencies are now allowing consumers to access their credit reports for free once a week through April 2021.

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