Federal student loan borrowers who fall behind on their bills will once again face financial consequences.
After the Covid pandemic-era pause on the payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments.
With that grace period now over, those who don’t pay their student loan bills are at risk of collection activity.
Borrowers should receive numerous notices from their student loan servicers before they go into delinquency or default, said higher education expert Mark Kantrowitz.
Usually, your payment has to be around 90 days late for it to be reported to the credit rating companies, Kantrowitz said. It takes somewhere between 270 days and 360 days for you to face the consequences of default, he added.
Those include possible garnishment of your wages and Social Security benefits, up to 15%, Kantrowitz said. Defaulted federal student loan borrowers can also lose eligibility for a mortgage from the Federal Housing Administration or the U.S. Department of Veterans Affairs.
“Borrowers should not let it get this far,” Kantrowitz said.
