Your payment doesn't have to stop you from staying current
If you cannot afford your student loan payment this month, you have options that prevent default and keep your account in good standing. The key is contacting your loan servicer before the payment is due—not after. Most servicers offer income-driven repayment plans, deferment, forbearance, or temporary payment reductions that can lower what you owe when ready, sometimes to $0 per month.
Default happens when you miss payments for 270 days (about nine months) on federal loans. That is a long runway, but waiting until then costs you. Your credit score drops, your tax refund can be seized, and your wages can be garnished. The sooner you act, the more options remain open to you.
Key Takeaways
- Contact your loan servicer before your payment is due to discuss income-driven repayment, deferment, or forbearance—do not wait until you miss a payment.
- Income-driven repayment plans can lower your monthly payment to as little as $0 if your income is low enough, and you stay current while on the plan.
- Deferment and forbearance pause or reduce payments temporarily, but interest may still accrue on unsubsidized loans, increasing what you owe overall.
- Missing a payment does not when ready hurt you, but after 90 days late your credit report is affected, and after 270 days you enter default with serious consequences.
- If you have private student loans, your options are narrower—contact your lender directly, as private loans do not have income-driven plans or federal protections.
Income-driven repayment plans: how they work and when to use them
An income-driven repayment plan recalculates your monthly payment based on what you actually earn, not the standard 10-year payoff schedule. There are four federal plans: Saving on a Valuable Education (SAVE), Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Each uses a slightly different formula, but all can reduce your payment significantly if your income is low or you have a large loan balance relative to what you earn.
Under SAVE, the newest plan, your payment is 5 percent of your discretionary income (income above 225 percent of the federal poverty line for your household size). If you earn less than about $15,000 per year as a single person, your payment is $0. You stay current on the loan while paying $0, meaning you do not default and your credit is not affected. Interest still accrues on unsubsidized loans, but you are not falling behind.
To switch to an income-driven plan, log into your servicer's website or call them directly. You will need to provide recent income documentation—usually your most recent tax return or a pay stub. The change takes effect within one to two billing cycles. You can switch plans or return to the standard plan later if your situation improves.
Deferment and forbearance: pausing payments temporarily
Deferment pauses your federal loan payments for up to three years at a time if you meet specific conditions: you are in school at least half-time, you are in a residency or fellowship program, you are unemployed or underemployed, or you have an economic hardship. During deferment on subsidized loans, the government pays the interest for you. On unsubsidized loans, interest accrues but you do not have to pay it—it gets added to your balance.
Forbearance is broader and does not require you to meet specific conditions. You can request it if you are experiencing financial hardship, and your servicer can grant it for up to three months at a time, renewable up to three years total. During forbearance, your payments are reduced or paused, but interest accrues on all loan types. This means your balance grows even though you are not paying.
Deferment is usually preferable to forbearance because interest does not accrue on subsidized loans. However, forbearance is faster to obtain if you do not fit deferment categories. Request either one through your servicer's website or by phone. The process typically takes one to two weeks.
What happens if you miss a payment: the timeline and consequences
Missing one payment does not when ready trigger default or damage your credit. Here is what actually happens: after 30 days late, your servicer reports the missed payment to the three credit bureaus (Equifax, Experian, TransUnion). Your credit score drops, usually by 50 to 100 points depending on your starting score. After 90 days late, the delinquency appears on your credit report and stays there for seven years.
At 270 days late (about nine months), your federal loan enters default. Once in default, the entire remaining balance becomes due when ready. The government can seize your tax refund, garnish your wages without a court order (up to 15 percent of disposable income), and offset other federal benefits. Your credit score drops further, making it harder to borrow for a car, home, or anything else.
The good news: you can get out of default by rehabilitating the loan. This means making nine on-time payments within 20 days of the due date over a 10-month period. After you complete rehabilitation, the default is removed from your credit report, though the late payments remain. Rehabilitation is available only once per loan.
Private student loans: fewer options, act faster
Private student loans do not have income-driven repayment plans, deferment, or forbearance in the federal sense. Your options depend entirely on what your lender offers. Some private lenders offer temporary payment reductions or interest-only periods, but these are not may provide and vary widely by lender.
Contact your private lender directly as soon as you know you cannot pay. Explain your situation and ask what hardship options they have. Some lenders will work with you; others will not. If your lender refuses to work with you and you fall behind, the consequences are similar to federal default—credit damage, wage garnishment (after a court judgment), and a lawsuit.
If you have both federal and private loans, prioritize federal loans first because federal protections are stronger and more flexible. Once your federal situation is stable, address the private loan.
Consolidation and loan forgiveness programs
If you have federal loans and your income is very low, Direct Consolidation can combine multiple loans into one, which simplifies payments and may unlock forgiveness programs. Public Service Loan Forgiveness (PSLF) forgives remaining balances after 120 on-time payments if you work for a government agency or nonprofit. Teacher Loan Forgiveness forgives up to $17,500 if you teach in a low-income school for five years.
These programs require you to stay current on payments (or on an income-driven plan with $0 payments). If you are in default, you are ineligible. Consolidation takes about 30 days to process. Forgiveness programs take years to complete but can eliminate your debt entirely if you meet the requirements.
Steps to take right now
First, find out who your loan servicer is. Log into studentaid.gov and look under "My Aid." If you have federal loans, your servicer's name and phone number are listed there. If you have private loans, check your loan documents or call the lender whose name appears on your statements.
Second, call your servicer before your next payment is due. Tell them you cannot afford the payment and ask what options are available to you. Be honest about your income. They will walk you through income-driven repayment, deferment, or forbearance. This conversation takes 15 to 30 minutes.
Third, get the plan in writing. Your servicer will send you a confirmation email or letter showing the new payment amount and start date. Keep this for your records. Do not assume the change is complete until you see it reflected in your account.
Fourth, make sure you understand what happens to interest. If you choose forbearance or deferment on an unsubsidized loan, interest accrues. If you choose income-driven repayment, interest accrues but you are making payments (even if they are $0), so you stay current.
Frequently Asked Questions
Will switching to income-driven repayment hurt my credit?
No. Switching to an income-driven plan is a normal account change. Your credit is not affected. You stay current on the loan, and your payment history remains clean. The only way your credit is hurt is if you miss payments before requesting a plan.
Can I get my payment lowered without switching plans?
Not permanently. Your servicer cannot straightforward reduce your payment on the standard 10-year plan. You must switch to income-driven repayment, deferment, or forbearance. Income-driven repayment is the most common choice because it is permanent and keeps you current.
What if I cannot afford the payment even on an income-driven plan?
If your income is very low, your payment under SAVE or IBR can be $0 per month. You are still considered current, and you do not default. Interest accrues on unsubsidized loans, but you are not falling behind. If your situation improves later, your payment adjusts upward.
Do I have to pay back the interest that accrues during forbearance?
Yes. Interest that accrues during forbearance is added to your loan balance. You pay it back over time as part of your loan. This is why deferment is preferable on subsidized loans—the government pays the interest instead of you.
Can my wages be garnished if I am on an income-driven plan?
No. As long as you are making on-time payments on an income-driven plan (including $0 payments), you are current and cannot be garnished. Garnishment happens only in default, which requires 270 days of missed payments.