Student Loan Default: Consequences & How to Fix It (2026 Guide)

Student loan default is a legal status that begins after you miss payments for a set period of time—about 270 days for federal loans and typically 120–180 days for private loans. Once a loan enters default, collections accelerate, and the consequences depend entirely on whether the loan is federal or private.

Before default, a loan is considered delinquent. After default, the rules change. Federal loans move into government collections. Private loans move toward lawsuits. The outcomes look similar — pressure to pay — but the legal paths are very different.

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Choose the situation that matches what’s happening to you:

• I have federal student loans, and my wages or tax refund are being taken. → How to Get Out of Default Fast

• I have private student loans (Navient, Sallie Mae, SoFi, or similar lenders), and I’m being sued or threatened with a lawsuit. → Private Student Loan Default Guide

• I’ve missed payments, but nothing has happened yet. → Read the timelines below to see what comes next.

Student loan default is a legal status change—not a collections tactic. It marks the point where a loan leaves ordinary servicing and enters a formal collections system. What changes next depends on whether the loan is federal or private.

Federal Student Loans: The 270-Day Rule

Federal student loans enter default after about 270 days of missed payments. Until then, the loan is delinquent. On day 270, the status changes automatically.

At default, the loan is transferred from a regular servicer to the Department of Education’s collections unit, commonly referred to as the Default Resolution Group. From that point forward, the government—not the servicer—controls the account.

Private Student Loans: The Contract Timeline

Private student loans follow the terms of the promissory note, not a single federal rule. Most are charged off after 120 to 180 days of missed payments, though timelines vary by lender.

A charge-off moves the account into collections, but it does not automatically trigger enforcement. Private lenders and debt collectors must sue you first. Unlike the federal government, private lenders cannot garnish wages or seize accounts without filing a lawsuit and winning a judgment in state court.

Any forced payment requires court involvement.

Related: What to do When You’re Sued for a Private Student Loan

Federal Student Loans

• When default happens: After about 270 days of missed payments.

• How collections work: Administrative — no court order required

• Wage garnishment: Allowed automatically

• Tax refund seizure: Yes (Treasury Offset Program)

• Time limits: No statute of limitations

• Ways out: Rehabilitation or consolidation

Private Student Loans

• When default happens: Typically 120–180 days (varies by contract)

• How collections work: Court-based — lawsuit required

• Wage garnishment: Only after judgment

• Tax refund seizure: No

• Time limits: Governed by state statutes of limitation

• Ways out: Settlement or litigation outcomes

Once a loan is in default, the entire balance is accelerated, and the collection authority expands. The consequences depend on who holds the loan and what legal tools they are allowed to use.

Federal Student Loan Default: Administrative Consequences

Federal student loans are collected through administrative authority, not lawsuits.

• Loan acceleration: The full balance becomes due immediately, with added collection costs.

• Wage garnishment: A portion of disposable pay can be taken without court approval.

• Tax refund seizure: Federal and state refunds can be intercepted through the Treasury Offset Program.

• Loss of repayment access: Income-driven repayment and forgiveness programs are unavailable until default is resolved.

Related: Treasury Offset Program and Student Loans

Private Student Loan Default: Legal Consequences

Private student loan default does not grant automatic collection powers.

• Accelerated balance: The full amount becomes due under the loan contract.

• Collections activity: Calls and letters, often through third-party agencies.

• Lawsuit required: To force payment, the lender must sue and win.

• Judgment enforcement: Only after judgment can wages be garnished or liens recorded, subject to state law.

Related: Defenses to Private Student Loan Lawsuits

Student loan default is resolved differently depending on whether the loan is federal or private. The paths below describe the types of exits that exist—not the steps or timelines involved.

Federal Student Loans: Administrative Paths Out of Default

Federal student loans offer standardized programs for resolving default. Each option ends default in a different way and carries different long-term tradeoffs.

• Rehabilitation: Resolves default through a required payment process and can change how the default appears on a credit report.

• Consolidation: Replaces the defaulted loan with a new federal loan, ending default without reversing prior credit history.

• Settlement: Rare for federal loans and typically requires a large lump-sum payment.

Related: How to Get Out of Default Fast

Private Student Loans: Negotiation and Litigation Outcomes

Private lenders do not offer administrative rehabilitation programs. Default is resolved through negotiation or legal outcomes.

• Settlement: Negotiating to close the account for less than the full balance.

• Litigation Outcomes: Resolution through dismissal, judgment, or court-supervised settlement, depending on the case.

Related: Private Student Loans in Collections

Some effects of default apply regardless of whether the loan is federal or private. These outcomes do not depend on lawsuits, garnishment authority, or who holds the debt.

Credit Report Damage

Default is one of the most serious negative events that can appear on a credit report. Missed payments are reported first as delinquencies. Once the loan defaults or is charged off, the account is marked as a major derogatory item.

That status can remain on a credit report for up to seven years from the date of default. Resolving default can stop new collection activity, but prior credit reporting does not disappear automatically.

Related: How to Dispute Student Loans on Credit Report

Professional and State Licensing Risks

Some states tie professional license eligibility or renewal to student loan standing. This most often affects state-licensed roles such as teachers, nurses, lawyers, and similar professions.

The impact is state-specific and depends on the licensing board’s rules. Default can delay renewal or trigger additional requirements even if no lawsuit or garnishment is active.

Student loan default is a civil financial matter, not a crime. Failing to pay student loans—federal or private—does not result in arrest or jail.

In rare private-loan cases, court consequences arise only from ignoring a judge’s order, not from the debt itself.

Related: Can You Go to Jail For Not Paying Student Loans?

Defaulting on student loans does not automatically put your house at risk. Federal student loan collections focus on income and tax refunds, not real property.

Private lenders would first have to sue and obtain a judgment before any lien is possible, and forced home sales remain uncommon.

Related: When Can Student Loans Take Your House

Student loan default does not simply disappear because time passes. Federal student loans remain collectible indefinitely until resolved.

Private student loans follow state statutes of limitations, which can restrict lawsuits after a certain period, but the rules vary by state and by loan.

Related: Student Loan Statute of Limitations by State