What Is a Defaulted Student Loan?

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After graduation, all student loans used towards your education are required to be paid back with interest. Every loan holder will determine their timeline of when these payments are expected to be paid.

All private and federal student loan borrowers are legally obliged to repay all monthly payments concerning their student loan within the terms written in the agreement. Failure to comply with these conditions over an extended period of time results in a defaulted loan. Defaulted loans can result in serious consequences that can be difficult to reverse. Hence, it is incredibly important to take precautionary steps to ensure that your loans are being paid off appropriately.

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In most cases, the first 90 days past the student loan payment’s due date will cause your loan to be delinquent, where it will remain until arrangements are communicated with the lender. If no arrangements are made after the 90-day mark, the status of your loan will be communicated with the three major national credit bureaus.

If not paid within this 90-day window, you risk the loan appearing on your credit report and damaging your credit score. A low score can make it harder to be approved for future investments like renting an apartment or buying a house. It can also take a long time to restore your score to where it was before or an acceptable number.