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If you’re having trouble paying your student loans, you’re not alone. More than 42.7 million borrowers have federal student loan debt.

In fact, 20% of all American adults with undergraduate degrees have outstanding student debt and 24% of postgraduate degree holders report outstanding student loans, according to the Education Data Initiative. Almost 8%% of students use student loans from a private source, such as a bank or a credit union. The average federal student loan debt balance is $38,375, while the total average balance (including private loan debt) may be as high as $41,618.

If you’re among these borrowers, you may find it challenging to afford the payments on your loans—especially if you have other debt and financial obligations. Student loan debt is now the second-highest consumer debt category after mortgages.

If you are delinquent on your student loan for a certain period of time, your loan will go into what’s called default. The consequences to student loan default can be serious–and if the student loan in question is private (rather than federal) there are particular factors to be aware of. Read on to learn what can happen if you don’t pay your private student loans, what your options are, and how best to avoid a default happening in the first place.

What Happens If You Don’t Pay Your Private Student Loans?

Each private student loan lender will likely be a little different, but generally, missing a student loan payment can put your loan into delinquency, and may incur late fees and/or penalties.

In addition, depending on the loan, interest can accrue on those penalties and on the unpaid principal loan amount, which then can get added to how much you owe. If you miss too many consecutive payments, you may be at risk of defaulting on the loan.

Each private lender has their own terms that trigger student loan default. That typically means multiple missed payments. Even if you declare bankruptcy, it’s unlikely your student loan debt goes away. It’s important to check the terms of your private student loans, since they vary by lender.

Once a student loan goes into delinquency or default, it will likely affect your credit score. That can possibly affect your ability to take out loans in the future or achieve other financial goals, like buying a house.

In addition, once a private student loan goes into default, the lender can send it to collections. If you can’t pay your private student loans, you could ultimately face a judgment that could result in a garnishment of your wages.

Ideally, if your student loan payments are too high, you might consider other options before risking delinquency or default.


💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

What If You Can’t Pay Your Federal Student Loans?

The penalties and provisions attached to federal student loans are quite different from those for private student loans. If you have both federal and private loans it’s important to consider them separately when coming up with a plan to grapple with default.

Federal loans often come with more protections and options for repayment plans. One option is to pursue an income-driven repayment plan (IDR), which allows for more manageable payments based on your income and family size. Generally, your payment amount under an income-driven repayment plan is a percentage of your discretionary income. The percentage is different depending on the plan.

You might also be eligible for deferment or forbearance for your federal loans, if you qualify, which can temporarily pause your student loan payments.

Even though federal student loans (both subsidized and unsubsidized) are government-backed and originated by the U.S. Department of Education, they’re administered by a student loan servicer, which is a private company in charge of the loan. While this means you might be making your payments to a private loan company, it’s still a federal student loan and it comes with federal student loan protections.

Options If You Can’t Pay Your Private Student Loans

If your private student loan repayment seems too high, however, the options are different. You can’t apply for an IDR plan for a private student loan, for example. Every private loan lender sets its own terms and conditions. Getting private student loan help varies with each lender.

While there are fewer options if you can’t make your private student loan payments, there are still some actions you can consider.

1. Talking to Your Lender

If your private student loan payments are too high, then it might be worth talking to your lender. You could start by getting a copy of your promissory note so that you know all the terms and conditions of your specific loan.

Each private lender sets out its own repayment and deferment options, so your loan may differ from your friends’ loans.

Lenders, however, want to get paid, and it’s not in their interest for you to default. Once you have the terms of your loan in hand, then you can try talking to your private lender about potential alternative student loan repayment plans to see if they’ll work with you on what you can afford or even if you might be able to put your loan payments on hold if you need to.

2. Exploring Deferment and Forbearance Options

In certain circumstances, as mentioned above, deferment and forbearance are available to temporarily put payments for federal loans on hold. However, for private student loans, the forbearance and deferment options will be determined by your lender.

Private lenders may offer forbearance and/or deferment in certain circumstances, such as returning to grad school or entering active military duty. If you can’t pay your private student loans, then you may want to see if your lender offers these options.

It’s important to know, though, that in most cases, interest continues to accrue and compound during forbearance or deferment on private student loans. That means the interest on the amount you owe builds up and gets added to the loan principal (which then accrues its own interest), and could end up costing you more in the long run.

3. Making a Student Loan Repayment Budget

This may sound obvious, but it can be important to create a plan and budget for repaying your student loans. Cutting back on some expenses or looking for additional income to allocate towards student loan payments could pay off in the long run.

Because student loan interest accrues and compounds over time, every little bit paid off now can save more money later.

In addition, if a borrower makes as many payments as possible on time, it could save late fees or additional penalties.

There are a few principles for how to tackle student loan payment.

You could start with the loans that have the smallest balances and build momentum, a strategy known as the snowball method, or start with the highest interest loans to save yourself the most money (the avalanche method).

You can also benefit from prepaying more than the minimum monthly payment. If you allocate additional payment towards your loan principal, then you won’t accrue interest on that principal you paid down, and you could save yourself money.

4. Refinancing your Student Loans

If your private student loan payments are too high, one way to potentially lower your monthly payments could be to refinance your student loans by extending your term.

If you need lower monthly payments right away, extending your loan term is one way to accomplish this. (You may pay more interest over the life of the loan if you refinance with an extended term, however.)

Once you’re on more solid financial footing, refinancing could qualify you for a lower interest rate, which could save you money in the long run (since interest adds up and compounds over time).

Recommended: How to Pay Off Student Loans

5. Declaring Bankruptcy

It is possible to declare bankruptcy when the majority of your debt is made up of student loans. However, the legal bar for having your student debt discharged is high.

You may have your federal student loan discharged in bankruptcy only if you file a separate action, known as an “adversary proceeding,” requesting the bankruptcy court find that repayment would impose undue hardship on you and your dependents in the future.

Private student loans can also be discharged in bankruptcy. Note that private student loans are exempt from bankruptcy discharge (similar to taxes and child support) without a separate application. In that application, you would have to prove in court that you are unable to pay the loan and make a case that it will be extremely difficult to do so in the foreseeable future.

However, if you can make a case for it financially, the court may rule to discharge the loan. “Some private loans for educational purposes can be discharged in a normal bankruptcy proceeding, just like most other consumer debts,” according to the Consumer Financial Protection Bureau.

It’s important to take into consideration the serious impact a bankruptcy will have on your credit rating and ability to borrow money in the future.

Recommended: Bankruptcy and Student Loans, Explained

Lowering Your Student Loan Payments

If you’re struggling to make your payments and need private student loan help, then refinancing your private student loans, ideally with a lower interest rate or more favorable loan terms could lower your monthly payments. Just be aware that refinancing federal student loans makes them ineligible for federal benefits like income-driven repayment plans and deferment.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What happens if you can’t pay back a private student loan?

Each lender handles this issue differently, but in general, if you can’t pay back a private student loan, your loan first goes into delinquency, and you may be charged penalties and/or late fees. Typically, after a number of missed payments, the loan goes into default, which can damage your credit score and make it more difficult to get credit or loans, including a mortgage. The lender can also send your loan to collections. If you still can’t pay it, they might pursue a judgment to try to garnish your wages.

To avoid delinquency or default, reach out to your lender immediately if you’re having trouble repaying your loan to find out what your options are.

How can I get rid of student loan debt legally?

To get rid of student loan debt legally, you have a few options. If you have federal student loans, you could opt for an income-driven repayment plan, which bases your monthly loan payments on your discretionary income and family size and typically results in a lower monthly payment. If you choose the income-based repayment (IBR) plan, your remaining loan balance may be forgiven after you make a certain number of payments over 20 or 25 years.

If you have private student loans, you can talk to your lender to see if they might be willing to negotiate a settlement or offer you deferment or forbearance. Or you could consider refinancing your loans to lower your monthly payments, if you qualify. You could also declare bankruptcy, but the process is challenging and it will have a serious impact on your credit and ability to borrow money in the future.

What do I do if I cannot afford my student loans?

If you cannot afford your student loans, there are ways to potentially lower your monthly payments to make them more manageable, such as switching to an income-driven repayment plan if you have federal loans, or applying for federal deferment or forbearance.

For private loans, you can reach out to your lender to see if they might be willing to offer you a repayment plan with a lower monthly payment. You could also examine your budget and look for expenses to eliminate and reduce, and then put the money you save toward your loan payments. You might also consider student loan refinancing to see if you qualify for a lower interest rate or more favorable loan terms that could lower your payments.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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