Can You Go to Jail For Not Paying Student Loans?

According to Forbes, student loan debt in 2020 reached an all time high of $1.6 trillion, with 45 million borrowers owing approximately $32,731 each. While students may have plans to repay their loans by securing a great job soon after graduation, this doesn’t always happen. In fact, CNBC reports that 1 million students end up defaulting on their loans each year. That figure is expected to jump to 40% of borrowers by 2023, which would equate to 18 million loans in default.

So, what happens when a student fails to repay their loan? Can the student get arrested for skipping out on their payments? Let’s dive a little deeper into the issue to uncover the facts.

Can you go to jail for not paying student loans?

Although early America had laws that allowed for the jailing of anyone who didn’t, or wasn’t able to, pay their debts, the practice was outlawed in 1833. There are no more debtor’s prisons in this country. If you head to the U.S. Department of Education’s website, you’ll clearly read that “going to jail” is not a consequence of failing to pay your student loans.

The confusion associated with being arrested for defaulting on student loans comes from multiple stories in the news. These stories all have headlines that indicate the offender was jailed for non-payment of their student loan, when in reality, that was not why the individuals were arrested. In each case, the borrower was sued by the lender. A judge then issued a ruling on the case in the lender’s favor that required the borrower to take certain actions. When the borrower failed to follow through on the judge’s ruling, a warrant was issued for his or her arrest.

What are the penalties for not paying student loans?

Typically, graduates are expected to begin making their student loan payments six months after graduation. This gives the graduate time to land a job and get on their feet. Most likely, the loan requires monthly payments. The payment date for the loan is always clearly listed on the payment coupon. When the lender does not receive the payment by the due date, the loan becomes delinquent.

The first consequence for borrowers comes after the student loan has been delinquent for more than 90 days. This is when the lender reports the non-payment to the three major national credit bureaus, which results in the lowering of your credit score. A low credit score makes it hard to qualify for an auto loan, as well as a mortgage. Some landlords also check an applicant’s credit score before approving them for a rental, so you can see how not keeping up with your student loan can affect other areas of your finances.

Delinquent Federal student loans are said to be in default once 270 days have passed since a payment was made. Once in default, you won’t be eligible to apply for any future Federal Student Aid. The government will also take steps to seize your tax refund, garnish your government benefits, or garnish your wages. Private loans may enter default status much earlier, usually between 90 and 120 days. At this stage, the private lender will initiate court proceedings to have a judge grant permission for the lender to garnish your wages.

If a lender opts to sue you and you choose not to show up to your initial court date, the judge may rule against you in your absence. You will be responsible to follow any rulings made by the judge. If you don’t, you could be found in contempt of court and have a warrant issued for your arrest.

What should you do if you can’t make your loan’s minimum monthly payment?

Fortunately, there’s a great deal of help out there if you find yourself unable to make the requirement minimum monthly loan payments. However, it’s important that you take action before your account becomes delinquent.

Contact the lender

Start off contacting your lender to see if you can negotiate a lower monthly payment that is more in line with what you can afford. You’d be surprised how many lenders are willing to work with borrowers. They’d rather collect some money then no money at all.

Income-driven repayment plans

If you have a federal student loan, you can contact the lender and request to be put on an income-driven repayment plan. You’ll need to demonstrate a financial need; however, those who qualify will have their monthly loan payment adjusted based on their income. Not only does that mean a lower monthly payment, but also the possibility of having any remaining debt on the loan forgiven after 20 to 25 years.


Deferments are an option for several different groups of people. Individuals serving in the military, students still attending school, employees of a public service organization, students in a medical residency and anyone suffering a financial hardship are eligible to apply for a deferment on their student loans. With a deferment, you can pause your student loan payments for a period of time, not to exceed three years. During this time, subsidized loans do not accrue interest, however, unsubsidized loans do.


A forbearance is similar to a deferment in that it puts a pause on your payments. The loan will continue to grow interest with a forbearance, which means when you resume making payments, you’ll have a larger debt to tackle. Most forbearance programs are available in 12-month increments, so you’d need to reapply each year that you qualify.

Consolidate your loans

In the event that you have more than one loan, you may be able to consolidate your loans. Having one monthly payment is much easier to manage than multiple payments. You’ll also want to shop around, as it’s possible you could consolidate with a company that is able to offer a lower interest rate. Some of the top financial institutions that provide consolidation loans include SoFi, Discover Student Loans, Splash Financial, and CommonBond.

Student Loan Rehabilitation Program

Only federal student loans that are in default are eligible for the Student Loan Rehabilitation Program. This program requires borrowers to make nine monthly payments over the course of 10 months. The payments must be made within 20 days of their due date to count. Once a borrower meets these criteria, the default status is removed from his or her account, collection activities cease, and borrowers are once again eligible for future Federal Student Aid.