Can I Go to Jail For Not Paying a Student Loan?

You cannot be jailed or arrested for failing to pay student loans. Default is a civil issue, not a criminal one. But missing payments still brings serious financial consequences, which vary depending on whether you have federal or private loans.

Federal student loan default won’t put you in jail. But the government has strong collection powers.

When your loan goes into default, the Department of Education transfers it to the Default Resolution Group and then to a collection agency. That Group is the department that manages defaulted federal loans before they go to collections. It can:

• Garnish your wages without a court orderSeize your federal tax refund

• Withhold part of your Social Security benefits

Default also adds collection fees, damages your credit, and increases your balance through ongoing interest charges. And unlike private loans, federal debt can follow you for decades — even if you defaulted on a student loan 20 years ago.  If you’re in this situation, here’s how to get student loans out of default fast.

Defaulting on private student loans doesn’t involve jail, but it creates serious financial risks.

Private lenders do not have the same administrative powers as the Department of Education. They must sue you in court before they can garnish wages or seize bank funds. Until then, they may place your loan with private student loan collections, where agencies can:

• Demand payment in full

• Report late payments and default status to the credit bureaus

• File a lawsuit to collect the debt

The lawsuit itself is the greatest risk. Lenders sometimes wait until the student loan statute of limitations — the legal deadline to file a lawsuit — is nearly expired.. But once they win a judgment (a court order confirming you owe the debt), they can garnish wages, take funds from your bank account, or place liens on property.

Defaulting on student loans can damage your finances, but it will not lead to arrest or jail. To be clear:

• No Arrest Warrants: Debt collectors cannot have you arrested. Their authority is limited to contacting you, reporting to credit bureaus, or filing a private student loan lawsuit.

• No Jail for Missed Payments: Missing payments is a civil matter. Jail is only a possibility if you ignore a court summons and are held in contempt of court — which can lead to a student loan judgment.

• No Prison for Default: Default is not fraud. Fraud is a criminal act, but being unable to make payments is not. Debtors’ prisons were abolished in the U.S. in the 1800s, so jail has never been a consequence of student loan default.