If you’re in the process of comparing student loans, or are reading over your loan terms, you’ve most likely heard a term called “student loan default.” It’s not always clear what this means, and it can be difficult to decipher exactly what this means. However, it is an important term to understand. We’ve broken down exactly what student loan default is, and how it could impact you below.
What does it mean to default on a student loan?
Default essentially means you haven’t made payments on your loan according to the terms outlined when you signed the contract.
On federal student loans, you typically enter default when you haven’t made a payment in nine months, or 270 days. With private loans, the time specified to enter default varies by lender. Typically, though, you’ll default after you miss three payments (or have gone 120 days without making a payment). However, some private student loans will enter default after only one missed payment, so it’s important to understand your particular terms as specified by your lender.
How Default Happens
Defaulting often happens after your loan becomes delinquent. In most cases, your loan will become delinquent the first day after you miss a payment. Until you pay the past due amount, or make an arrangement to enter deferment or forbearance (where you may be able to temporarily pause your payments), your loan will stay in delinquency. If you go too long without making any payments (as specified for the loan types above), you’ll enter default.
If you default on your student loan, it’s important to contact your lender or servicer as soon as possible to discuss your options. Default can be scary, but ignoring it can have much worse consequences. If you are able to contact your lender or servicer quickly, it may be possible to resolve the situation before the damage is done.
There’s a lot of confusing student loan terms out there. Now that you understand what default is, check out our guide to student loan terminology to learn more!