Updated: Jul 28
If you're struggling to make your student loan payments, you may be wondering whether your debt will ever be forgiven or discharged. Unfortunately, in most cases, the answer is no – unpaid student loans don't just disappear. Here's what you need to know.
How Student Loans Work
First, let's review how student loans work. When you take out a student loan, you're borrowing money from the federal government or a private lender. You'll need to repay this loan over time, typically with interest.
Federal student loans come with a variety of repayment plans, including income-driven repayment plans that can lower your monthly payments if you're struggling to make ends meet. Private student loans may have less flexible repayment terms, but you may be able to negotiate with your lender if you're having trouble making payments.
What Happens If You Don't Pay?
If you stop making payments on your student loans, you'll likely go into default. This means you've failed to make payments for a certain period of time, typically 270 days for federal student loans and 120 days for private student loans.
When you're in default, your lender may report your late payments to credit bureaus, which can damage your credit score. You may also face wage garnishment, which means your lender can take money directly from your paycheck to repay your debt.
Can Unpaid Student Loans Ever Be Forgiven?
In some cases, you may be able to have your student loans forgiven or discharged. However, this typically only applies to specific circumstances, such as:
You're permanently disabled and unable to work.
You work in certain public service fields, such as teaching or healthcare.
Your school closes while you're enrolled or shortly after you leave.
Even in these cases, the process for having your loans forgiven or discharged can be complex and time-consuming. You'll need to submit documentation to prove your eligibility and follow a specific set of steps.
What Are the Consequences of Unpaid Student Loans?
If you don't repay your student loans, you'll likely face a variety of consequences beyond damage to your credit score and wage garnishment. For example:
You may not be able to qualify for additional loans or credit cards in the future.
Your tax refunds may be intercepted to pay your debt.
Your lender may take legal action against you to collect the debt.
In addition, unpaid student loans can have a long-term impact on your financial wellbeing. They can limit your ability to save for retirement, buy a house, or start a family.
The Numbers on Student Loan Debt
If you're feeling overwhelmed by your student loan debt, you're not alone. Here are a few key statistics to put the issue in perspective:
Americans owe over $1.7 trillion in student loan debt as of 2021.
The average student loan debt per borrower is over $32,000.
More than 9 million borrowers are currently in default on their student loans.
43% of borrowers aren't making payments on their student loans because they're in school or their loans are in deferment or forbearance.
What to Do If You're Struggling to Make Payments
If you're having trouble making your student loan payments, there are a few steps you can take:
Contact your lender to explore your repayment options.
Consider an income-driven repayment plan if you qualify.
Look into deferment or forbearance if you need to pause your payments temporarily.
Seek the help of a student loan counselor or financial advisor.
Remember, ignoring your student loan debt won't make it go away.