Consequences of Defaulting on Student Loan Payments

Federal student loan borrowers who miss payments will have their missed payments reported as a forbearance rather than delinquencies, thanks to the Biden administration's loosened rules. While missed payments during the on-ramp period will have minimal impact on credit scores, interest will continue to accrue and may cause the loan balance to rise. Borrowers who continue to miss payments after the on-ramp period ends may face more significant consequences, including a negative impact on their credit scores. It is recommended that borrowers explore income-driven repayment plans and be proactive in taking advantage of available programs to manage their student loan payments.