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What Happens If You Just Stop Paying Your Student Loans

May 20, 2018 · 4 minute read

We’re here to help! First and foremost, SoFi Learn strives to be a beneficial resource to you as you navigate your financial journey. Read more We develop content that covers a variety of financial topics. Sometimes, that content may include information about products, features, or services that SoFi does not provide. We aim to break down complicated concepts, loop you in on the latest trends, and keep you up-to-date on the stuff you can use to help get your money right. Read less

What Happens If You Just Stop Paying Your Student Loans

If your student loan payments seem overwhelming, you should know that you’re not alone. Americans are shouldering a growing student debt burden; In fact, U.S. borrowers owe a combined $1.38 trillion in student loan debt, according to the Federal Reserve Bank of New York ’s report. As of the end of 2017, 11% of that debt had payments that were more than 90 days overdue.

For federal student loans, if you don’t make payments for more than 270 days, your loans will go into default. Having trouble paying off student debt is not uncommon. According to the latest figures as of the publication date of this article, 11.5% of the borrowers who started repaying federal student loans from 2013 to 2014 defaulted within the next three years.

Given the tough job market and rising cost of living in urban areas, it’s completely understandable that paying off your student loans is a challenge. But if you just stop making payments, there can be serious, long-lasting consequences. Ignoring your debt can seem like the easy solution, but in the long run, it actually makes things worse. There are ways to deal with your student loan debt in a constructive way—you’re never out of options.

Do student loans ever go away?

The short answer is no, if you’re not part of the Public Service Loan Forgiveness Program . Unlike other forms of debt, such as home and auto loans, student loans generally cannot be discharged during bankruptcy. You have to pay them even if you don’t graduate, are struggling to find a job in your field, or hated your college.

If you ignore your student loans, your balance will keep growing as interest accrues, plus you’ll likely owe hefty additional fees if your debt gets moved into collections. Your credit score will take a big hit, which can affect your ability to get a mortgage, car loan, credit card, or apartment lease. If you default on federal student loans, the government can take your tax refund or up to 15% of your wages. You can also be sued, though this is more common with private loans.

Is there a student loan statute of limitations?

There is no statute of limitations for federal student loans. That means you can be sued at any point for not paying your loans, as long as you’re alive. There is a statute of limitations for private loans, which is set by individual states and generally ranges from three to 10 years. But even this limit just means the lender can’t sue you anymore—it doesn’t mean the loan goes away or they stop trying to collect what you owe.

How to Get out of Paying Student Loans

Are there ways to get out of paying student loans? You can temporarily pause payments on your federal loans by requesting a deferment or forbearance. You might qualify if you’re still in school at least part-time, unable to find a full-time job, facing high medical expenses, or dealing with another financial hardship.

But you can only defer your loans for up to three years, and forbearance is also temporary—the limit on forbearance is up to your loan servicer. Private lenders sometimes offer relief when you’re dealing with financial hardship, but they aren’t required to.

With federal loans, if you sign up for an income-based repayment plan, you can get your loan balance forgiven after a certain amount of time, the amount of time depends on the plan. (Keep in mind, you’ll still have to pay taxes on the amount forgiven.)

In extremely rare cases, certain loans can be cancelled or discharged , if your school closes while you’re enrolled or you are permanently disabled. For obvious reasons, these aren’t options to count on, so you can assume your loans will be sticking with you.

Alleviate the Burden of Student Loans by Refinancing

Because student loans don’t disappear, it’s important to make them manageable. For some borrowers, student loan refinancing can be a good way to lower interest rates, reduce monthly payments, and combine all your loans into a single monthly payment.

This is especially true if you have good credit and a strong employment history (if those are a bit shaky, you could also bring on a cosigner to qualify for better terms). You can refinance federal or private loans, or a combination of the two.

Note that refinancing will disqualify you from the government’s deferment and income-based repayment programs, but it could potentially save you hundreds of dollars on your payments each month.

Looking to make your student loan debt more manageable? Refinancing with SoFi can lower your monthly payments so you can get back in control of your finances.


SoFi Lending Corp. is licensed by the Department of Business Oversight under the California Financing Law, license number 6054612.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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