There are a variety of reasons you might have difficulties making your loan payments on time – unexpected expenses, unemployment or other extenuating circumstances.
If you payments are past due, but not yet in default, you want to do everything you can to avoid the consequences of a loan default. These consequences include additional collection costs applied to your loan balance, damage to your credit rating, and potential wage garnishment. The good news is that you may qualify for loan payment relief. Check out our resources for past-due loans.
Loans in Default
Even if you have defaulted on your federal student loans, you have options for resolving your default and restoring your good credit. USA Funds can help you with solutions for loans in default.
Common Reasons (and Solutions) for Late Payments
There are many reasons borrowers fall behind in their payments. These are some of the most common ones borrowers give for missing payments.
Reason: I didn’t know when my payments were supposed to start.
Federal law requires lenders to notify education loan borrowers of the date of their first payment – as well as provide important information, such as the lender’s name and address, repayment options and estimated loan balance – well in advance of the first payment. If you’ve moved and not notified your lender of your change of address, their communication might not have reached you.
Solution: Use the National Student Loan Data System to obtain the contact information for your lender or loan servicer.
Reason: I wasn’t happy with my classes, so I dropped out of school and don’t believe I should have to repay my loans.
Solution: With rare exceptions, federal law requires you to pay back your federal student loans, even if you didn’t complete your course of study, were dissatisfied with the education you received or failed to find a job in your field of study.
Reason: My loan was sold, so I thought that meant it was paid off.
Federal education loans, like many other kinds of loans, are sometimes sold or assigned to parties other than the original lender – but you are still obligated to pay off your loan. If your loan is sold, the new holder is required to notify you about the sale and provide you with new payment information, such as their name and address.
Solution: Continue to make your scheduled payments, using the new lender information. You can find your lender’s contact information on the NSLDS site.
Reason: I ran out of coupons and didn’t get a new coupon book.
There are many reasons for which you might not have received a new coupon book, many of which are out of your control. However, you are still responsible for your loan, so it’s better to be proactive than suffer the consequences of missed payments.
Solution: Contact your lender for a new supply and, in the meantime, continue to make your payments on schedule. You can find your lender’s contact information on the NSLDS site. Better yet, ask about allowing your loan payments to be automatically deducted from your bank account.
Reason: My child is responsible for paying off the loans. That PLUS loan is my child’s responsibility.
Parents of undergraduates may take out PLUS loans to help pay for their child's education. Repayment of the PLUS loan remains the parent's legal obligation, even if you and your child agree that the child will pay off the loan.
Solution: To find information about where to make your PLUS loan payments visit the NSLDS site.
Reason: I fell behind in my payments and was too afraid or embarrassed to seek help.
Lenders and guarantors understand that sometimes borrowers experience difficulties with repaying their loans. But nobody wins in a student loan default, and all parties involved want to help borrowers avoid default.
Solution: Contact your lender, loan servicer, or guarantor to learn about the deferment and forbearance and repayment options available to you. You can find their contact information on the NSLDS site.
Reason: I have other debts to repay; my student loan is at the bottom of the list.
It’s not uncommon for students to leave school with more than one kind of debt. But other loans are generally less flexible in their repayment options than federal student loans.
Solution: If you are unable to make your student loan payments, advise your lender or loan servicer, and ask for help immediately. Visit the NSLDS site to find the contact information for your lender or servicer.