You have options before you miss a payment

If you cannot afford your student loan payment this month, do not skip it and hope the problem goes away. Missing a payment triggers late fees, damages your credit score, and can push you toward default — a status that makes the entire loan balance due immediately and opens you to wage garnishment and tax refund seizure. But you have real moves available right now, before the payment is due.

The fastest option is to contact your loan servicer directly and ask about income-driven repayment plans or forbearance. Income-driven plans recalculate your monthly payment based on what you actually earn; for many borrowers, this means a payment of $0 per month while you are in financial hardship. Forbearance temporarily pauses or reduces your payment for up to three years. Both stop the late-payment clock and keep you out of default. You do not need to wait for a payment to be late to request either one — in fact, calling before the due date is the smartest move.

Key Takeaways

  • Income-driven repayment plans can lower your monthly payment to $0 if your income is low enough, and you can request one before your payment is due.
  • Forbearance pauses or reduces your payment for up to three years and stops late fees from accruing, but interest continues to accrue on unsubsidized loans.
  • Your loan servicer's phone number is on your loan statement or bill; calling them is free and takes 15 to 30 minutes.
  • Missing a payment triggers late fees and credit damage within 30 days, and default status within 270 days of non-payment.
  • Deferment is available only if you meet specific conditions (unemployment, economic hardship, or enrollment in school), but it stops interest accrual on subsidized loans.

Income-driven repayment: how it works and what it costs

Income-driven repayment recalculates your monthly payment based on your discretionary income — roughly your gross income minus 150% of the federal poverty line for your family size. There are four income-driven plans: SAVE (Saving on a Valuable Education), PAYE (Pay As You Earn), REPAYE (Revised Pay As You Earn), and IBR (Income-Based Repayment). SAVE is the newest and typically offers the lowest payments; it calculates your payment at 5% of discretionary income, compared to 10% or 15% on the older plans.

On any income-driven plan, if your income is below the poverty line for your household size, your payment is $0. You still must make the $0 payment each month (or certify your income annually) to stay in the plan and avoid default. Interest continues to accrue on unsubsidized loans, but on SAVE, the government covers unpaid interest on undergraduate loans so your balance does not grow.

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 — a recent pay stub, tax return, or W-2. The switch usually takes one to two weeks. If you are already on an income-driven plan, you can recertify your income at any time if your circumstances have changed.

Forbearance: pausing payments temporarily

Forbearance temporarily reduces or stops your payment for up to three years. Unlike income-driven plans, forbearance does not require you to prove your income — you simply tell your servicer you cannot afford the payment, and they grant it. You can use forbearance once for up to 12 months, then again for another 12 months, up to 36 months total in your lifetime.

The catch: interest continues to accrue on all loans during forbearance, including subsidized loans. If you do not pay the interest as it accrues, it gets added to your principal balance when forbearance ends, and you owe interest on that interest going forward. This is called capitalization, and it makes your loan larger.

Forbearance is best used as a short-term bridge — a few months while you find work or stabilize your income — rather than a long-term solution. If you know your hardship will last more than a few months, an income-driven plan is usually smarter because it ties your payment to your actual income rather than pausing it and letting interest pile up.

Deferment: when you may have access to and what it covers

Deferment pauses your payment and stops interest accrual on subsidized loans (the government pays the interest while you are in deferment). You may have access to for deferment only in specific situations: you are unemployed or underemployed, you are experiencing economic hardship, you are enrolled in school at least half-time, you are in a residency or fellowship program, or you are serving in the Peace Corps.

Deferment is harder to get than forbearance — you must document your reason and your servicer must approve it. But if you may have access to, it is better than forbearance because interest does not accrue on subsidized loans. On unsubsidized loans, interest still accrues and capitalizes, so the advantage is smaller.

If you are unemployed, you can request economic hardship deferment by providing a letter from your employer stating you were laid off, or by showing that you are receiving unemployment benefits. If you are in school, you will need to provide enrollment verification from your school.

What happens if you miss a payment

A payment is considered late after 15 days past the due date. At 30 days late, your servicer reports the late payment to the credit bureaus, and your credit score drops. Late fees accrue — typically 6% of the monthly payment amount, capped at 15% of the original loan balance. At 90 days late, the delinquency appears on your credit report and stays there for seven years.

At 270 days (nine months) of non-payment, your loan enters default. Once in default, the entire remaining balance becomes due immediately. The federal government can garnish your wages without a court order, seize your tax refunds, and offset your Social Security benefits. Default also makes you ineligible for income-driven plans or forbearance until you rehabilitate the loan.

To get out of default, you must either pay the full amount owed in one lump sum, or enter a rehabilitation agreement where you make nine on-time payments over ten months. Once you complete rehabilitation, the default status is removed from your credit report, though the late payments remain.

Loan consolidation as a last resort

If you have multiple federal student loans, Direct Consolidation combines them into a single loan with a single monthly payment. Consolidation does not lower your interest rate — it averages the rates of your existing loans — but it can lower your monthly payment by extending the repayment term to up to 30 years.

Consolidation also resets your repayment clock: if you were already in default or delinquency, consolidation clears that status and gives you a fresh start. However, consolidation erases any progress you had made toward Public Service Loan Forgiveness (PSLF), so if you work for a government agency or nonprofit and are counting toward forgiveness, consolidate only if you have no other option.

You can consolidate through your servicer's website or by submitting a Direct Consolidation Loan application at studentaid.gov. Consolidation takes four to six weeks.

Private loans: fewer options, more urgency

If your loans are private (not federal), your options are narrower. Private lenders do not offer income-driven plans or forbearance as a matter of course — each lender sets its own rules. Some offer hardship programs that pause or reduce payments; others do not.

Your first move is to call your private lender and ask what hardship options they have. Some will work with you; others will not. If your lender refuses to work with you and you cannot pay, your only realistic option is to refinance the loan with a different lender that offers better terms or a lower rate. Refinancing requires a credit check and proof of income, so it is not available to everyone.

If you cannot refinance and cannot pay, the lender can sue you for the debt. A judgment against you allows wage garnishment and bank account levies. Private loans do not have the same protections as federal loans, so prevention is critical — call your lender before you miss a payment.

How to contact your servicer and what to ask for

Your loan servicer's phone number is on your monthly bill or loan statement. Call and say you cannot afford your current payment and want to explore your options. Have your loan account number ready. The servicer will ask about your income and family size, then walk you through income-driven plans and forbearance.

Ask specifically: "What is my payment under SAVE?" and "How long can I use forbearance?" Write down the answers and the name of the person you spoke with. If the servicer tells you something that does not match what you read here, ask them to send it to you in writing — servicer policies vary slightly, and written confirmation protects you if there is a dispute later.

If you are struggling to understand your options or the servicer is unhelpful, contact the Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243). They do not make decisions, but they can explain your rights and help you understand what each option means for your specific situation.

Frequently Asked Questions

Can I get my payment lowered without going on income-driven repayment?

Forbearance will pause or reduce your payment without requiring income documentation, but interest continues to accrue and will capitalize when forbearance ends. Income-driven plans are better if your hardship will last more than a few months because your payment stays tied to your income rather than pausing and growing larger.

If I go on income-driven repayment and my income goes up, do I have to pay more?

Yes. You must recertify your income once a year, and if your income has risen, your payment will increase. You can recertify online through your servicer's website. If your income drops again, you can recertify immediately and your payment will adjust downward.

Will forbearance or income-driven repayment hurt my credit score?

No. Using forbearance or switching to an income-driven plan does not damage your credit. Missing a payment does. Requesting forbearance or income-driven repayment before you miss a payment is the move that protects your credit.

What if I have both federal and private student loans?

Handle them separately. Federal loans have income-driven plans and forbearance; private loans do not (unless your specific lender offers them). Call each servicer independently and ask what options are available for that loan.

How long does it take to switch to an income-driven plan?

Usually one to two weeks from the date you request it. Your servicer will send you a confirmation letter with your new payment amount. If you need the payment lowered before the switch is complete, ask about temporary forbearance while your income-driven plan is being processed.