September 17, 2025

Shock alert! Nearly six million Americans are more than three months late on their federal student loan payments. This tricky spot is called delinquency, and it starts the moment you miss a payment. But wait, if you slip past 90 days, it’s officially reported to credit bureaus and can seriously harm your credit score. And if it goes worse into default, brace yourself for scary things like wage garnishment and losing tax refunds or Social Security payments. Consumer Reports rings the warning bell: "Borrowers facing difficulties should contact their loan servicer immediately to explore repayment plans suited to their financial situation." Waiting only tightens the noose! If you’ve already fallen into default, there’s hope through loan rehabilitation—making steady monthly payments for about 10 months to clear that default status—or loan consolidation, which merges bad loans into one but may hike up your interest costs. What to do now? Don’t just ignore those payment reminders! Reach out to your loan servicer pronto if you expect to miss or have missed payments. Switch to income-driven repayment (IDR) plans that match your payment to your income and family size. These plans recently reopened and got a makeover to be simpler and easier. Better yet, sign up for automatic payments (autopay) to dodge missed payments. This can even lower your interest rate by 0.25%. Can’t pay even on IDR? Then try deferment or forbearance, which pause payments temporarily. Use tools like the Federal Student Aid Loan Simulator online to find the best fit for you, and always monitor your loan status at StudentAid.gov. Heads up about credit scores! A 30-day late payment can tank your score by 90-110 points. Wait till 60 days, and it drops by up to 150 points. After 90 days, severe damage kicks in and hangs around for seven years. This can block future loans or make borrowing more expensive. Got questions about the SAVE (Saving on a Valuable Education) plan? From August 1, 2025, interest starts piling up again after a break period. This causes your loan balance to swell if you don’t pay the interest monthly. Even if payments pause, this interest can capitalize—meaning it adds to your principal—making everything costlier down the road. Pro tip: keep up with at least the interest each month to keep your balance from ballooning. Wondering which repayment plan saves the most money? Income-driven plans like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE) adjust payments based on income and family size. Some can lower payments to even $0! However, since they stretch the loan term, you might pay more interest overall. What about the latest interest rates? For loans given between July 1, 2024, and June 30, 2025, Direct Subsidized and Unsubsidized Loans (undergraduate) have a fixed 6.39% rate. Graduate Unsubsidized Loans carry 7.94%, and PLUS Loans hit 8.94%. Lucky borrowers who enable autopay can snag a 0.25% rate cut! Quick snapshot: Federal student loans are a lifeline for many students, offering protections private loans don’t. But ignoring payments can lead to big trouble. The secret sauce? Act fast, know your repayment options, and keep your credit score safe. Don’t let those loan balances run wild—take control today!

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Tags: Student loans, Loan delinquency, Repayment plans, Save plan, Interest rates, Loan default,