Starting next month, about 40 million Americans will have to start making payments on their federal student loans after a pause of 3.5 years.
As the due date looms, many borrowers are feeling frustrated and betrayed — especially after President Joe Biden’s student loan forgiveness plan was struck down by the U.S. Supreme Court this summer. On social media sites like Redditand X, the platform formerly known as Twitter, several people have been floating the idea of simply not paying their bills, and in some cases, rallying others to do the same in order to spark a national student debt strike.
Whether out of necessity or solidarity, the impending deadline has many asking what will happen if they don’t pay back their student loans.
Ultimately, experts say, the financial consequences could be devastating.
“Every once in a while I get the borrower who says, ‘It’s just not worth it. I’m not paying my debt,'’’ says Betsy Mayotte, the founder and president of The Institute of Student Loan Advisors, a nonprofit organization that provides free advice to borrowers.
“What I usually end up telling them,” Mayotte says, “is that refusing to pay ends up being more expensive than managing the loan.”
Do I have to pay my student loans during the on-ramp?
In short, yes. The on-ramp period is designed to help people who are struggling ease back into making their student loan payments after a long pause. Missed payments won't ding your credit during this time, but experts strongly advise that you should begin making payments if you can afford them.
Will my wages be garnished if I don't pay my student loans?
It's possible. If you miss a few payments — especially during the on-ramp — you won't have to worry about the government deducting money from you paycheck. However, if you don't pay your loans for 270 days, or about nine months, your loans can be put into default. At that point, your wages could be garnished.
Will my car get repossessed if I don't pay my student loans?
It's highly unlikely, especially if you're cooperating with the Department of Education or the hired collections agency. However, the federal government has been known to get liens on borrowers' assets following a lawsuit, according to NPR. When that happens, the loan debt gets tied to something valuable like a car or a house, and the government could feasibly repossess it or force a sale.
Can I go to jail if I don't pay my student loans?
Not necessarily. Failing to pay your student loans can have devastating financial consequences. Eventually, your student loans will be put into default and you may lose federal loan benefits, have your wages garnished, get barred from federal student aid among other consequences. Your loan holder may sue you, as well. If you ignore the court date or the court's orders — that could land you in jail. To read more click here.