Student loans have helped many pay for the expenses of a college education. Of course you need to pay back student loans those even if you don’t graduate. Fortunately student loans have what’s known as a grace period – a set time after you graduate, leave school or drop below full-time student status before the loan repayment begins. The grace period gives you time to find a job or deal with a difficult life issue before you have to pay back the student loan.
If you can’t or choose not to pay back student loans, you risk going into default. To default on a loan means you did not pay it back on schedule according to the terms of the promissory note – the legal document you signed when you received the loan.
The good news is you don’t have to panic if you miss one payment. Going into default won’t happen right away. If you miss a few payments your student loan will first be tagged with a delinquent status. It won’t officially go into default until 270 days have passed without a payment.
At that point, you will face some serious consequences. The U.S. Department of Education’s Federal Student Aid office lists these possible actions that may be taken if you default on your student loan: