If you don’t pay your student loans as agreed, your debt could go into default status. This carries serious consequences, including damage to your credit, seized wages, and other efforts to collect the unpaid debt. 

This guide will explain what you need to know about student loans in collections and how you can recover financially if you have loans you can’t pay. 

If you stop paying your student loans for several months, your debt will enter default and collection activities could be initiated against you. 

If you have federal student loans and you miss 270 days of payments (about nine months), your loans will typically go into default. If you have Perkins Loans, you can go into default immediately after a missed payment.  

Previously, the Department of Education would sell defaulted loans to private collection agencies, but that’s no longer the case. In 2021, the department announced a change in that policy. Today, collection activities are managed by Federal Student Aid’s Default Resolution Group.

If you miss payments with your private lender, on the other hand, you could have your debt sold to a private collection agency. This can happen after as few as 90 days of missed payments, although the timeline varies by lender. 

Whether you have federal or private student loans, the consequences of defaulting on your debt can be severe. These can include:

Related: What is the statute of limitations on private student loans?

If your loans are in default or you have student loans in collections, don’t ignore it. You can minimize the damage by being proactive and taking immediate steps to deal with the problem. This means:

The specific steps you could take to get your student loans out of collections vary depending on whether you have federal or private loans.

Here are some of your options to get federal student loans out of collections and return them to good standing:

Here are some of your options to get private student loans out of collections:

Related: Private student loan forgiveness: Is it possible?

If you have federal student loans, you may have benefited from special protections thanks to COVID-era policies. In 2020, payments were paused, interest rates were set to 0%, and collection efforts were halted. These benefits were extended many times, but are now set to expire on Sept. 1, 2023. Your first loan payment will be due starting in October. 

If you haven’t yet restored your loans to good standing, consider doing so with one of the methods above before the pause ends. If you’re not sure where your defaulted loans stand, contact the Default Resolution Group online or by phone at 1-800-621-3115. 

If you have student loans in collections, you can face serious consequences including possible garnishment of your wages. But you do have rights, and there are certain things debt collectors can’t do, including:

Be proactive about addressing student loans in collections so you can fix your financial situation as soon as possible. If you have student loans in collections or are worried about having your loans sent to collections, take action today to find a solution.