Collection fees can be added to your loan balance once you default.
On top of its substantial collection powers, the Department of Education also has the power to add massive collection fees to your loan balance once you’re in student loan default. Read more about help for student loans in default.
As a reminder, you default on a federal student loan when you go more than 270 days without making a required monthly payment under a repayment plan.
With private student loans, there’s no one answer when collection fees can be added to your balance. It could be 90 days, 180 days, or even one day past due — it’s different for each private loan provider.
In addition to defining default differently, each loan program has different repayment terms that determine when collection fees can be added to your loan balance.
Your best bet to find out what collection fees can be added to your private loan is to look at your promissory note. If you don’t have it, request it from the loan servicer, lender, or debt collection agency. Their contact information should be easily google-able.
Do you have to repay student loans in collections? Yes, you are still legally required to repay student loans that have gone into collections. However, you may get them to settle for 60% of your loan balance if you have a lump sum lying around.