What is the Impact of One Late Student Loan Payment?

One Late Student Loan Payment

Have you ever wondered what would happen if you made one late student loan payment? Not being late every month, or every few months, but just one time? Perhaps you envision being scolded by some Sallie Mae rep, incurring devastating fees, or taking an immediate hit on your already fragile credit score.

While these late payment scenarios may be exaggerated in your mind, there are nuggets of truth to each of them.

Understanding the Difference between Loan Delinquency and Loan Default

Fortunately for those with student loans, lenders understand that people make mistakes. Missing one payment and missing several payments are two different issues in the eyes of lenders, and are treated differently as well.

  • Loan Delinquency: A loan becomes delinquent the day after the missed due date. The loan remains in delinquent status until the borrower takes an action such as payment, deferment, or forbearance.
  • Loan Default: A loan goes into default when a person fails to repay according to the terms of the agreed promissory note. True, by being late on a payment, you are not adhering to the promissory note. However, there is a time lapse lenders and the federal government will allow before the loan is officially considered to be in default status. For example, most federal student loans will not be moved into default status until after the person has gone 270 days without making any payments.
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Consequences for One Late Student Loan Payment

For now, let’s assume that your loan is delinquent, and that you have only one missed payment at this time. The possible consequences of a delinquent loan include the following:

  • Ding on Your Credit Report: For Federal student loans, delinquency is typically reported to the three major credit bureaus (TransUnion, Equifax, and Experian) after 90 days has passed. The length of time afforded before reporting to a credit bureau is different for private loans and for each lender; for example, Sallie Mae usually reports delinquent private loans after 45 days. Usually if you are not 45 days late, you won’t incur a bad mark on your credit report – at least, not yet.
  • Late Fees: There is typically a grace period on delinquent loans before a late fee is assessed, though it varies by lender. Sallie Mae, for example, issues a late fee of 6% of your minimum payment after one late payment that is at least 15 days past your due date.

In order to find this information, I actually had to call Sallie Mae and ask – they don’t always make it easy to find. So be sure to call your own lender and ask the same questions so that you understand the consequences of a delinquent federal student loan versus a delinquent private student loan.

To Avoid Late Penalties, Be Proactive in Dealing with Loans

No one wants to miss a payment on their student loans, most of all because of the possible consequences that will occur. One of the best ways to prevent doing so in the future is by setting up automatic bill payment on your student loans that will debit your account before the due date. If you do this, be sure to understand whether or not your bank account will push a payment through or not in the event that you do not have enough funds to cover the debit (and if they do push the payment through, understand that you will incur overdraft fees from your bank with the upside being that you will not be late on your student loan payment).

Another way to be proactive when dealing with your loans is by keeping the lines of communication open with your lender throughout the repayment process. Instead of sticking your head in the sand and hoping for the storm to blow over, get in touch with your lender as soon as you know that you will need to make one late student loan payment. Hopefully you have had on-time and consistent payments up until now, as this could help you in making sure your delinquency is not reported to the credit bureaus or even to take off a late fee.

Just like when you are late on a credit card payment, the consequences of being late on student loan payments can be both financial as well as non-financial. Fortunately, there are grace periods for each of the consequences discussed.

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  • philip

    Thank you so h for this information! I am buying a home and was 2 days late!! Freaking out all because the automatic debt didnt come out in time!

    • You’re welcome, Philip! I’m glad the post was helpful. Hopefully you’ll be fine. Best of luck to you!

  • Emily m

    how long after you get out of delinquency does it come off your credit report?

  • Amber

    This makes me feel somewhat better! I am enrolled in school again but my school hasn’t informed fedloan of my enrollment. Hopefully my deferment will be processed quickly so that I can avoid a credit ding! Thanks for the great info!

    • I’m glad to hear that. And thank you for the nice feedback! Let us know if you have any further questions in the future.

  • Chris

    So if I have a student loan due early next month, I will still have time to collect some money to paid it?

  • Vera Popovic Zadrima

    Hi. I started making payments on my student loan since November 2014 and all were done on time. I just made my April 2015 payment with the due date the 26th. Because it fell on a weekend I had to put the payment date as Monday April 27. I didn’t know I couldn’t make the payment on a weekend. I need to apply for Direct Graduate Student Loan in June. Will this payment be considered a late payment/default on my credit report and not let me get approved for the Direct Graduate Loan? I’m really worried and if you can answer my question I’d greatly appreciate it. Thank you.

  • Melissa Marshall

    I was late on one student loan payment that was under $60. My TransUnion score dropped 95 points. I went from having good credit to poor credit. And everywhere I am reading online says it can take over 3 years to recover from a hit like this. It isn’t just a “ding”.

  • Many people don’t have just one loan with a servicer, they have several due to the way student finance is structured. And while you may be writing one single check each month to your servicer, that check is being distributed across each outstanding loan. Which means that, if you are late on your payments, and your servicer reports your late payment to credit agencies, it’s not just one ding on your credit report, it’s several, one for each separate loan.