How to avoid delinquency, default, garnishment

As the Trump administration ramps up its student loan collection efforts, worried borrowers need to ask themselves a key question: Am I delinquent, or in default? The answer determines your best next steps.

“We’ve had a lot of clients contacting us recently who are extremely stressed and, in some cases panicked, about their loan situation,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.

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However, some borrowers wrongly believe they’ll be subject to wage garnishments or offsets of their retirement benefits — when in fact they are delinquent but not yet in default, Nierman said.

If you’re delinquent, there are things you can do to avoid default. And even those who are in default and at risk for collections can take steps to avoid such outcomes.

“The federal student loan system does provide several paths for bringing loans out of default,” she said.

Just because you’re behind on your payments doesn’t mean you’re in default.

Your student loan becomes past due, or delinquent, the first day after you miss a payment, according to the U.S. Department of Education.

Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, the New York Fed recently found.

Once you are delinquent for 90 days or more, your student loan servicer will report your past due status to the national credit bureaus, which can lead to a drop in your credit score.

The Federal Reserve predicted in March that some people with a student loan delinquency could see their scores fall by as much as 171 points. (Credit scores typically range from 300 to 850, with around 670 and higher considered good.)

Lower credit scores can lead to higher borrowing costs on consumer loans such as mortgages, car loans and credit cards.

But you’re not considered to be in default on your student loans until you haven’t made your scheduled payment in at least 270 days, the Education Department says.

The federal government has extraordinary collection powers on its student loans and it can seize borrowers’ tax refunds, paychecks and Social Security retirement and disability benefits.

But only those who’ve defaulted on their student loans can face these consequences, experts said.

Delinquent student loan borrowers should call their student loan servicer right away and request a retroactive forbearance for missed payments and then a temporary forbearance until they enroll in a repayment plan they can afford, according to the experts at the Education Debt Consumer Assistance Program. Some monthly bills under income-driven repayment plans wind up being as low as zero dollars.

There are also economic hardship and unemployment deferments available for those who qualify, as well as other ways to keep your loan payments paused while not falling behind.

Meanwhile, more than 5.3 million student loan borrowers are currently in default, and that total could swell to roughly 10 million borrowers within a few months, the Education Department estimates.

You can contact the government’s Default Resolution Group and pursue a number of different avenues to get current on your loans, including enrolling in an income-driven repayment plan or signing up for loan rehabilitation. 

You can get out of default on your student loans through rehabilitating or consolidating your debt, Nierman said.

Rehabilitating involves making “nine voluntary, reasonable and affordable monthly payments,” according to the U.S. Department of Education. Those nine payments can be made over “a period of 10 consecutive months,” it said.

Consolidation, meanwhile, may be available to those who “make three consecutive, voluntary, on-time, full monthly payments.” At that point, they can essentially repackage their debt into a new loan.

After you’ve emerged from default, experts also recommend requesting a monthly bill you can afford.

If you don’t know who your loan servicer is, you can find out at Studentaid.gov.

“Explore your options and create a plan for returning your loans back to good standing so you will not be subject to punitive collections activity,” Nierman said.