There are 43.2 million student loan borrowers in the United States, each with an average balance of $39,351. And federal student loan interest rates have risen to the highest level in a decade. It’s difficult to keep up with such large amounts of debt, especially when you’re just starting out.
But what happens to the people who fall behind on their payments? Are the penalties purely financial, or can you go to jail for not paying student loans?
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Can you go to jail for student loan default?
No matter what a debt collector or lender tries to tell you, you will not be arrested or imprisoned for failing to repay your student loans. They cannot send the police to your house to haul you to the police station. Though you can be sued in court in an effort to collect defaulted student loans, it will not be a criminal case.
Technically, it is illegal to arrest someone for failing to pay back their student loans — being sent to debtor’s prison used to be a regular occurrence. However, Congress outlawed the practice and the Supreme Court ruled it unconstitutional in 1833.
Even though jail isn’t on the table for unpaid student loan debts, the consequences of missed payments can make a borrower’s life miserable.
Civil vs. criminal offenses
Two different types of laws can be broken. They are:
- Civil matters: These are legal proceedings between individuals or organizations (lenders, for example.) Punishments include fines and other monetary reparations. Civil offenses are usually a failure to perform one’s legal duty. They include actions like traffic violations, slander, and negligence.
- Criminal charges: These are disputes between the government and an individual or organization. They are further broken down as misdemeanors (less serious) or felonies (more serious charges, like manslaughter or murder). Punishments include fines and possible jail time. There are five degrees of felony convictions, each involving more severe punishments than a misdemeanor charge.
The failure to pay back one’s debts, including student loans, falls under civil law. Lenders can sue the offending borrower, but jail is not a possible outcome — even if they are convicted in court.
There is a clear distinction between the punishments for breaking the two types of law:
Civil charges usually involve fines and possible wage garnishment. Criminal charges include punishments ranging from fines to jail time. There are five degrees of felony convictions, each involving more severe punishments than a misdemeanor charge.
You can be sued by a debt collector, but it will be in civil court
Debt collectors can take borrowers to court to collect their money. The suit is not filed with the intention of sending you to jail. Collection agencies are simply looking for a way to force you to pay them for your debts.
Pro tip: If you receive a court order to appear, DO NOT IGNORE IT. That could lead to an automatic judgment against you — for example, your wages could be garnished, or you could be held in contempt of court (which could ultimately land you in jail.) If you get a court summons and cannot appear in court for whatever reason, contact an attorney — many offer a free initial consultation — for advice on what to do.
Jail is a common threat
Even though jailing someone for not repaying a loan is illegal, arrests still happen. But people are not jailed due to the debt itself. Arrest warrants are issued because someone failed to appear in court.
Failing to appear for your court date is a criminal offense that can lead to arrest and jail time.
In other words, failing to pay the loan will not land you in jail. Ignoring a court order may land you in jail.
You could be arrested even if you miss your court date for legitimate reasons, such as not having transportation to the courthouse, being unable to miss work, needing to care for a dependent or failure to receive the summons in the mail.
Pro tip: This is why it’s particularly important to make sure lenders have updated addresses. Trying to evade your lender could leave you facing wage garnishment or worse.
An arrest example
It’s not uncommon for people to fear that they could be arrested for unpaid student loans. When a noteworthy arrest happens, the headlines often don’t make distinctions between unpaid student loans and missed court appearances.
For example, one instance in Texas was headlined “Man arrested by U.S. Marshals for unpaid student loan.”
Houston resident Paul Aker was arrested in 2016 over a $1,500 federal student loan. His loan had gone unpaid for 29 years.
“I was unaware of any outstanding debt,” Aker told CNNMoney. “I paid two other student loans and thought I had consolidated everything and paid it all off.”
The federal government had tried to serve Aker with a court order to appear in federal court, across numerous known addresses.
It was not the unpaid debt that led to his arrest. A judge issued an arrest warrant after he failed to appear in court.
What type of student loan debt do you have?
Whether you have federal student loans or private ones will make a big difference.
Federal student loans
Your federal student debt becomes delinquent the day after you miss your first payment. You will have to make a payment within 90 days, or the delinquency will be reported to the three major credit bureaus.
The loan will go into default when it is past-due by nine months. This will damage your credit score. The IRS could withhold your federal tax refunds and your wages may be garnished.
As soon as your loans go into default, you’re no longer eligible for deferment, forbearance programs, income-driven repayment plans or any additional federal student aid. Plus, your lender can take you to court.
Pro tip: In the aftermath of the COVID-19 student loan payment pause, the Biden administration has granted some flex until September 30, 2024. During this time, borrowers will have an “on-ramp period,” during which defaulted loans won’t be reported to the three major credit bureaus. However, interest will continue to accrue.
The U.S. Department of Education offers a helpful list of student loan forgiveness programs.
Private student loans
If you default on private loans, what happens next will vary by loan servicer. In general, it works like this:
- Your loan is considered delinquent as soon as you miss a payment, and you will be charged a late fee
- After 30 days, the delinquent account will be reported to the credit bureaus
- After 90 to 120 days of nonpayment, the loan goes into default
- Your credit score takes a hit
- The loan may be sold to a debt collection agency
- You could be sued, and a court could order wage garnishment
Pro tip: Private lenders cannot garnish tax refunds or Social Security checks.
Whether borrowers hold private or federal loans, entering default has extreme consequences. It can:
- Cause the entire remaining principal and interest balance to come due
- Prevent the borrower from receiving federal student loan assistance
- Damage the borrower’s credit scores
- Lead to a lawsuit and wage garnishment
Again, if a borrower defaults, their lender can sue them. If they don’t attend court, a judge may issue a warrant for their arrest. Make sure to address any delinquent loans as soon as possible to avoid the possibility.
The statute of limitations doesn’t apply to federal student loan debts
The statute of limitations on your debts is important because it’s one of your best protections against potential lawsuits from creditors and debt collectors, at least when it comes to debts that have been delinquent for years.
Unfortunately, there is no statute of limitations for federal student loan debt. Your lenders can try to collect any outstanding student loan balance no matter how much time has passed. The government has some extra powers as well. They don’t have to take you to court for permission to garnish wages, income tax refunds and even your Social Security checks.
Statutes of limitations for private student loans range from three to six years, depending on the state named in your loan agreement.
Pro tip: Credit accounts that are past the statute of limitations on debt are known as time-barred debts. Note that you’re still generally liable for time-barred debts, and they may still show up on your credit report.
A debt collector can pursue old debts indefinitely. The statute of limitations doesn’t prevent them from attempting to recover their money. It does, however, stop them from initiating a lawsuit against you for the time-barred debt.
If a debt collector sues you for an expired debt, you may be able to have the lawsuit thrown out. You can also file a countersuit against the debt collector, who would violate the Fair Debt Collection Practices Act. The FDCPA stipulates that lenders and debt collectors cannot sue you or threaten a lawsuit for debts that are past the state’s statute of limitations.
Remember that you still technically owe the debt, even though the statute of limitations has expired.
In most states, debt collection agencies can and will use other means to attempt to pressure you into paying. For example, they may try to contact you through email, mail, and phone calls or attempt to contact your friends or family.
READ MORE: What is the statute of limitations on debt
What to do if you can’t pay back your student loan
When borrowers realize that they might not be able to make their student loan payments on time, they should contact their lender as soon as possible to ask for a loan extension while they explore their repayment options.
Plenty of aid is available to borrowers struggling with student loans, especially federal ones. That includes:
- Income-based repayment plans that adjust payments down to a reasonable level for the borrower’s earning power
- Refinancing with consolidation loans can reduce the number of payments, extend the repayment term, and lower monthly payments
- Forgiveness programs that can discharge or cancel large portions of a borrower’s debt
Private lenders are less flexible than federal student providers and don’t offer the same aid programs. But it’s still beneficial to contact them when there’s a problem making payments.
They usually have their own strategies in place to help borrowers keep up with their payments. Either way, don’t ignore the problem. Be proactive and take timely steps to avoid delinquency, default, and lawsuits.
The bottom line
You won’t go to jail for defaulting on your student loans, but it’s important that you obey any court summons, because you CAN go to jail if you’re found in contempt of court. If you anticipate payment problems, have a preemptive chat with your lender to review your options. You don’t want to have to deal with debt collectors or worry about court appearances.