What Happens If You Don’t Pay Your Student Loans?

Student loans can be tough to pay back, but can you get away without paying them? And should you?

Statistics show that more than $1.56 trillion is student loan debt in the United States, with each borrower on average owing about $37,172. 45 million Americans currently have student debt, and the loan graph has grown by 113% in the last decade. Crazy, right?

There is only 56% of the federal loan debt that is being repaid in the US, the remaining 44% has either been in default or on hold.

Many students tie their future with the quality of education they receive, and that’s not an improper perspective. All of the success stories that we see today somehow or the other reflect on the quality of education that students receive during college. And that quality education requires a lot of money.

Around 50% of the population in the US is middle class, and almost 35% is working class. A middle class worker earns enough to meet ends by the end of the month, and in that budget, no family can afford to send their kid off to college. In such situations, people take student loans for themselves or their children in the hope of securing their future with good education.

When students graduate, the tough part of this process begins: paying back the student loan!

Many students are able to pay it back by taking out a portion of their monthly income or by other means, but some don’t have the financial capacity to pay it back. The amount grows over time because of the interest rate added, which makes it even harder for people to pay it off.

What happens if you never pay your Student Loans?

There are serious consequences of not paying student loans. There are some short-term and some long-term complications that can really mess with your future.

The only major effect it has is on your record. Not paying off your student loans will have a drastic effect on your credit scores and will lower it down by a major bracket. Having a low credit score will lead you to complications when getting a mortgage or getting a car on lease.

If your student loan goes on default, the government can deduct 15% from your wages or take your tax refund to compensate for your loan.

Do Student Loans ever get written off?

If you think by not paying the student loan it will magically go away and disappear from your loan record, it’s not going to happen. Whether you graduated college or are unemployed or whatever your financial situation, you will have to pay the loan and the interest back.

However, if you die or become completely disabled, that is when the loan will be written off as bad debt.

One option to have them forgiven is by applying to Public Service Loan Forgiveness or Income Driven Repayment programs which give forbearance to borrowers. What the IDR does for example, is ask borrowers to pay 10% of their discretionary income for 20 years. Whatever amount is paid during these 20 years is considered as loan repayment, and the remaining is ‘forgiven’.

Will the government cancel Student Loan Debt?

In the wake of the current pandemic, it is no secret that the average American standard of living has decreased. People have had their sources of income cut off because of downsizing or major losses in business and jobs.

Many influencing parties have lately appealed to the government to cancel student debt loans because students won’t be able to pay it off anyway.

The Coronavirus Aid, Relief, and Economic Security- CARES Act has given temporary forbearance on all federal student loans. Loans held from March 2020-September 2020 have been automatically suspended for every borrower, and an interest rate of 0% has been during this time period.

Cancelling student loan debt may be harder on the economy but according to a survey of students, at least one in every fifteen have considered committing suicide due to increasing student debt. Governments and economies are facing an even tough time losing valuable people who could otherwise be such an important contribution to the working class.

Can you go to jail for not paying your Student Loan?

Legally, you can’t go to jail for not paying your student loans.

In the US, failure to pay such loans adds to not paying civil debts, and there is no law or state that allows arresting borrowers because they couldn’t make a few payments. Except jail, there are several other consequences that you might face like low credit scores or rejection on your mortgage application.

Failure to pay the loan for more than a decade can also have the loan lending agency sue you for not being able to comply with the payment deadlines.

How can I legally quit paying Student Loans?

This section of the article will interest a lot of students who are just looking for ways to stop paying their loans- and that too, legally.

The first thing that you can do is- as i’ve mentioned above- is to apply for a loan forgiveness program. These programs will help you completely write off your debt without much hassle.

Working in the public service department may free you of your loans too. The government usually forgives the loans of people who choose their careers in civil service, and there are no taxes applicable on the forgiven amount either.

Another way of getting away with the student loan is by asking your employer if none of the federal programs are applicable to you. Many employers are now helping their employees by paying some portion of their student debt, for this, you simply have to ask your employer if they allow the payment through your company. However, whatever amount they agree to will be taxable because the loan repayment will be considered as part of your income.

The last option that you can consider to waive off your student debt completely is by filing for bankruptcy. In the documentation process you have to prove that you won’t be able to maintain even the basic standard of living due to loan repayment, and that you have no major source of income. The best way to do this is by guidance on the matter- hire a lawyer for that or have expert consultation.


Not paying your student loans can really shake up your record which can have further consequences when it comes to applying for lease or mortgage or even a credit card. If companies know that you already have an unpleasant record with repayments, they won’t trust you or invest in you.

Make sure that you’re prompt in paying for student loans, and if you can’t afford it financially, try one of the tips I have mentioned above. Do everything legally!

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.

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