Federal student loans enter default after 270 days of non-payment. Private loans can default much faster — sometimes after just one missed payment. Once you are in default, the consequences compound quickly, and understanding the timeline matters.
What Happens Immediately After Default
The entire loan balance becomes due immediately — this is called acceleration. You lose eligibility for deferment, forbearance, and income-driven repayment plans. Your credit score takes a significant hit. And unlike most other debts, the government can pursue collection without first obtaining a court judgment.
Wage Garnishment and Treasury Offsets
The government can garnish up to 15% of your disposable pay through Administrative Wage Garnishment. They can also intercept your federal tax refund, and in a surprise to many, they can offset up to 15% of your Social Security benefits through the Treasury Offset Program. For retirees on fixed incomes, this can be devastating.
Can You Reverse a Default?
Yes, but the path depends on your loan type. Federal loans offer two main paths: loan rehabilitation — which requires nine on-time payments and removes the default from your credit history — and loan consolidation, which creates a new loan to pay off the defaulted one. Both have different timelines, costs, and long-term consequences.
What About Private Student Loans?
Private lenders have fewer collection tools but can still sue you, obtain a judgment, and pursue wage garnishment or bank levies through the courts. Settlement negotiations are sometimes possible, especially if the loan has been sold to a collection agency.
The earlier you address a default, the more options remain available. Waiting until the garnishment starts limits what you can do. A free consultation can help you understand exactly where you stand and which path fits your circumstances.