What Can a Defaulted Federal Student Loan Do to Your Credit Rating?

Published on Aug 08, 2014 09:02 am

Whether you borrowed the money for yourself or someone else, defaulting on a federal student can be very detrimental to your credit, just like defaulting on any other type of debt reported to the credit bureaus.

Delinquent vs. Default

According to the U.S. Department of Education, your student loan becomes delinquent as soon as you miss a payment and will continue to be delinquent until payments are made current. A default means you failed to pay your loan according to the terms of your agreement. For federal student loans, a default is defined as making no payments for at least 270 days if you’re paying monthly or 330 days if your loan is through the Federal Family Education Loan program (FFEL).

Length of Detrimental Impact

A default on your federal student loan remains on your credit report for seven years after the date of the initial delinquency that eventually lead to your default. Furthermore, a default can also cause you to be ineligible for additional federal student aid, deferment or forbearance. In serious cases, legal action and wage garnishment may also follow.

Co-signers Also Affected

If you co-signed for a student loan, your credit score is just as much at risk as the primary borrower’s. If you co-sign for a loan, you’re promising the lender that you’re going to be equally responsible for making sure the loan is repaid on time.

Additionally, student loan payments are reported to credit bureaus. So, if you co-sign for a student loan and both you and the borrower are unable to make payments, both of your credit reports will show the loan as being delinquent or in default.

Options to Consider


If you find yourself facing default, make it a priority to contact your lender immediately and explain your situation. You may be able to request a repayment plan that gets you back on the right track. If you’re able to come to an agreement with your lender, be sure to avoid any additional late payments to your account. Making your payments on time and in full will be one the best first steps you can take toward getting your credit back in shape after your default.



About the Author
Mark Kennan is a freelance writer specializing in finance-related articles. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.


This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from ConsumerInfo.com, Inc., an Experian company.   © 2014 ConsumerInfo.com, Inc.  All rights reserved.

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