Millions of American student loan borrowers are at risk of default, with over 5 million already in default as of June 2025. Defaulting can lead to garnished wages, withheld tax refunds, and a damaged credit score. It’s crucial to act quickly to avoid or recover from default status.

Missing a student loan payment can lead to delinquency, but taking prompt action can prevent long-term consequences. Contact your loan servicer to explore options like deferment or forbearance. Failure to make payments within 90 days can result in credit bureaus being notified, impacting your credit score.

Different federal student loan programs have specific timelines for defaulting, ranging from 270 days for Direct Loans to 120 days for private loans. If your loan goes into default, contact your loan servicer immediately to discuss rehabilitation or consolidation options.

Rehabilitating a defaulted loan typically involves making nine on-time monthly payments over 10 months based on a percentage of your income. If you consolidate your loan, you can choose an income-driven repayment plan. Federal loan benefits can be restored, but the default will remain on your credit report.

The Department of Education has resumed collections on defaulted student loans as of May 2025. Borrowers facing wage garnishment or tax refund offsets can take action to avoid default status, including loan consolidation or rehabilitation. Private student loans also have specific default processes and recovery options.

Read more at Yahoo Finance: How to get student loans out of default