How to Avoid Defaulting on Your Student Loans

Violating your loan agreement can have severe consequences.

What is default?

Default occurs when you have made no payments on your student loan for at least 270 days. When you default you have violated your loan agreement, and the lender or servicer can request immediate payment in full.

You don't want to default on your student loans — take our word for it! Doing so can mean long-lasting, negative consequences to your financial future. Planning early for repayment can help you avoid those problems.

10 tips to help you avoid default

  1. Understand your rights and responsibilities regarding your repayment obligation as well as your repayment options.
  2. Borrow for college expenses only. Borrow only the amount you need and only what you can expect to repay.
  3. Keep all records regarding your loan. Make copies of all letters, canceled checks, and any forms you sign.
  4. Notify your lender or servicer when you have a change of address, phone number, or name, or if you change schools or your enrollment status.
  5. Seek help as early as possible if you have any difficulty maintaining your student loan repayment arrangement.
  6. If you have any questions, talk to your lender or student loan guarantor about the particular terms of your loan.
  7. Keep credit card debt to a minimum or avoid credit card debt completely.
  8. Create and maintain a spending plan that is within your monthly income.
  9. Consider making nominal student loan payments while in school. This will reduce the amount you owe after graduation.
  10. Make loan payments on time.

Payment options

By successfully managing the repayment of your student loans, you can meet your obligations, avoid financial problems, and help assure a clean financial record for your future.

You may qualify for one of the following repayment options to avoid default:

  • Alternative payment plans — You may qualify for income sensitive, graduated, or lowered payment plans.
    • Income sensitive payment plan - If you choose this plan, your monthly payments will be adjusted annually, based on your expected total monthly gross income from all sources.
    • Graduated payment plan - If you choose this plan, you will usually make lower monthly payments at first, and your payments will increase over time.
    • Extended payments - This option allows borrowers with FFELP loans in excess of $30,000 to repay over a 25-year period.
    • Income Based Repayment (IBR) - Available for FFELP and FDLP borrowers, IBR establishes a monthly payment that looks at your unique situation by considering your income, family size, and federal student loan debt.
    • Income Contingent Repayment (ICR) - Available to Federal Direct Loan Program (FDLP) borrowers only. Monthly payment is adjusted annually, based on the total amount of your Direct loans, your family size, and your adjusted gross income.
    • Pay As You Earn (PAYE) - Available to certain Federal Direct Loan Program (FDLP) borrowers only. Monthly payment is adjusted annually, based on the total amount of your FDLP loans, your family size, and your adjusted gross income.
  • Deferment — You may postpone your payments if you qualify for an economic hardship, in-school, unemployment, or disability deferment. Qualification is determined by current economic, enrollment, employment, or disability status. You are entitled to any of these deferments if you qualify.
  • To learn more about deferment, visit AIE's "Deferment and Forbearance" page.

  • Forbearance — You may qualify for a mandatory or economic hardship forbearance. Your lender/servicer will determine if you are eligible for an economic hardship forbearance.

    To learn more about forbearance, visit AIE's "Deferment and Forbearance" page.

  • Consolidation — You may be eligible to consolidate your loans through your lender/servicer under the Federal Family Education Loan Program (FFELP) or through the Federal Direct Consolidation Loan Program (FDCLP). Loan consolidation often reduces your monthly student loan payment.

    To learn more about consolidation, visit AIE's "Consolidating Your Student Loans" page.

Work with your lender.

Your lender would rather work with you to help you repay your loan than have you completely give up on repaying it. If they don't know why you aren't making payments, they can't help you figure out if there's any help available to you.

Contact your lender if you:

  • Leave school,
  • Change schools,
  • Change your graduation date ,
  • Graduate,
  • Change your enrollment status from full-time to less than half time,
  • Change your deferment status,
  • Change your name, address, and/or phone number, or
  • Have trouble making your loan payment.

Need more help?

TG can also provide you with information on loan repayment options. For more information, ask the experts at (800) 845-6267 or send an email message to