If you can’t afford your student loan payments, the fastest way to protect yourself is to call your loan servicer before you miss a payment and switch to a plan that matches what you actually earn. Federal borrowers have real options: income-driven repayment can drop your bill to as little as $0 a month, deferment or forbearance can pause payments during a short crisis, and forgiveness programs can wipe out remaining balances after years of qualifying work or payments. Private loan borrowers have fewer rights but can still negotiate. The one thing that makes everything worse is silence, because the consequences of default are severe and largely avoidable.
Call Your Servicer First
Your servicer is the company that bills you each month, and they are required to walk you through your options at no cost. Log in at StudentAid.gov to find yours. Your dashboard will list every federal loan you have; anything not shown there is likely private, and private loans have to be handled separately with each lender.
Before you call, gather your most recent tax return, a current pay stub if your income has dropped since you filed, and a rough count of your household size. Those three numbers drive nearly every relief calculation.
Lower Your Payment With an Income-Driven Plan
If your money problem isn’t going away in a few months, income-driven repayment is usually the right move. These plans set your monthly payment based on what you earn and your family size instead of what you owe. Payments can go as low as $0, and any balance left after 20 or 25 years of qualifying payments is forgiven. The Secretary of Education has authority under the Higher Education Act to establish these schedules.1Office of the Law Revision Counsel. 20 US Code 1087e – Terms and Conditions of Loans
Which Plans Are Available Now
The lineup is in transition. The SAVE plan was struck down by a federal appeals court in March 2026, and enrolled borrowers are being moved to other plans as Department of Education guidance develops. As of mid-2026, the working options are:
- Income-Based Repayment (IBR). Payments are 10% or 15% of discretionary income depending on when you first borrowed, with forgiveness after 20 or 25 years. IBR is open to all borrowers and is the most stable choice right now.
- Pay As You Earn (PAYE). Payments at 10% of discretionary income, forgiveness after 20 years. Being phased out by July 2028.
- Income-Contingent Repayment (ICR). Payments are the lesser of 20% of discretionary income or a fixed 12-year payment adjusted for income, forgiveness after 25 years. Also being phased out by July 2028.
A new Repayment Assistance Plan (RAP) is expected to launch in July 2026, but the Department has not finished rulemaking or built enrollment systems. If you need a plan today, IBR is the safest pick.
How Your Payment Is Calculated
Every income-driven plan uses a similar formula. Your payment is a percentage of your “discretionary income,” which is the gap between your adjusted gross income and 150% of the federal poverty guideline for your family size. For 2026, 150% of the guideline is $23,940 for a single person, and higher for larger households.2HHS ASPE. 2026 Poverty Guidelines A single borrower earning less than that has $0 in discretionary income and owes $0 per month.
Apply through the Income-Driven Repayment Plan Request at StudentAid.gov. The application pulls your adjusted gross income from the IRS, specifically line 11 of your Form 1040.3Federal Student Aid. What Was Your Parents Adjusted Gross Income for 2020 If your current income has dropped since your last return, you can submit alternative documentation like recent pay stubs instead.
Recertify Every Year
Income-driven plans require you to recertify your income and family size annually. Your recertification date is on your StudentAid.gov dashboard. Miss it and your payment can snap back to the standard amount, which is often dramatically higher. Family size includes your spouse, your children if you provide more than half their support, and other dependents in your household who rely on you for more than half their expenses.4Federal Student Aid. Economic Hardship Deferment Request Form Information If your income has dropped since your last tax filing, recertify early to lock in a lower payment.
The Tax Hit on Forgiven Balances
This catches borrowers off guard. Starting in 2026, balances forgiven at the end of an income-driven plan are treated as taxable income on your federal return. The American Rescue Plan Act made this forgiveness tax-free from 2021 through the end of 2025, but that provision expired. If a lender forgives $600 or more, you’ll get a Form 1099-C reporting the canceled amount to the IRS. On an $80,000 forgiven balance, the added tax could run $15,000 or more depending on your bracket. Forgiveness under PSLF stays permanently excluded from federal taxable income, and discharges for death or total and permanent disability also remain tax-free.5Office of the Law Revision Counsel. 26 US Code 108 – Income From Discharge of Indebtedness State treatment varies.
Pause Payments With Deferment or Forbearance
If your trouble is short-term, pausing beats defaulting. Both deferment and forbearance require documentation, and the difference matters for your balance.
Deferment Is Better When You Qualify
On subsidized loans, interest stops accruing during deferment. On unsubsidized loans it keeps accruing and gets added to your principal when the deferment ends, so your balance grows.6Federal Student Aid. Get Temporary Relief: Deferment and Forbearance
Economic hardship deferment is the most common type for borrowers struggling with payments. Your monthly income has to fall below 150% of the federal poverty guideline for your family size. Under the 2026 guidelines, that threshold is $1,995 a month for a single person, $2,820 for a family of two, and $3,645 for a family of three.2HHS ASPE. 2026 Poverty Guidelines Submit the Economic Hardship Deferment Request form with income documentation such as pay stubs or one-twelfth of the adjusted gross income from your most recent tax return.4Federal Student Aid. Economic Hardship Deferment Request Form Information
Other qualifying situations include returning to school at least half-time, active military service, and receiving unemployment benefits. Each has its own form.
Forbearance Is the Fallback
If you don’t qualify for deferment, general forbearance is the backup. Your servicer decides whether to grant it, but common reasons include medical expenses, financial difficulties, and changes in employment.7Department of Education. General Forbearance Request Interest accrues on every loan type during forbearance and capitalizes when it ends, so your balance grows while you aren’t paying. Treat it as a bridge, not a strategy.
Some situations trigger mandatory forbearance, meaning your servicer has to grant it. These include serving in a medical or dental residency, having student loan payments that equal or exceed 20% of your gross monthly income, and qualifying national service through AmeriCorps.8Federal Student Aid. Grace Periods, Deferment, and Forbearance in Detail
Forgiveness Programs Worth Checking
Public Service Loan Forgiveness
PSLF wipes out your remaining federal Direct Loan balance after 120 qualifying monthly payments while you work full-time for a government employer or a 501(c)(3) nonprofit. Other employers providing qualifying public services like public health or public interest law may count too, though eligibility can be harder to confirm.9United States Department of Education. Issue Paper 5 – Public Service Loan Forgiveness Eligibility Full-time means at least 30 hours a week on average, and two qualifying part-time jobs that together clear that bar also count. Only Direct Loans qualify, but you can consolidate other federal loans into a Direct Consolidation Loan to become eligible.
Submit the PSLF form every year rather than waiting until you hit 120 payments. Your employer’s authorized official has to sign it. Borrowers who wait have lost years to counting errors that would have been caught earlier.
Teacher Loan Forgiveness
Teach full-time for five consecutive academic years at a qualifying low-income school or educational service agency and you may get up to $17,500 forgiven on Direct Subsidized and Unsubsidized Loans.10Federal Student Aid. Teacher Loan Forgiveness The full $17,500 is for highly qualified math, science, and special education teachers; other qualifying teachers are eligible for up to $5,000.
What Happens If You Just Stop Paying
Federal loans go delinquent the day after a missed payment. After 90 days of delinquency, your servicer reports the missed payments to the three major credit bureaus, which can drop your credit score by 60 to 175 points depending on where it started.
After 270 days of missed payments, your loans enter default.11Federal Student Aid. Student Loan Default Default lets the federal government use collection tools without first suing you:
- Wage garnishment. The Department of Education can order your employer to withhold up to 15% of your disposable pay.12U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
- Tax refund seizure. Through the Treasury Offset Program, the government can intercept part or all of your federal tax refund.
- Social Security offset. A portion of Social Security benefits, including disability payments, can be reduced to collect on defaulted loans, subject to limits.
The default stays on your credit report for seven years and the full outstanding balance, including accrued interest, becomes due immediately. That report can block apartment rentals, car loans, and some employer background checks.
Getting Out of Default
Rehabilitation
Rehabilitation requires nine on-time monthly payments within a ten-month window. The payment is 15% of the difference between your adjusted gross income and 150% of the poverty guideline for your family size, divided by 12. If the formula produces less than $5, your payment is $5.13eCFR. 34 CFR 682.405 – Loan Rehabilitation Agreement Rehabilitation’s advantage over other paths is that it removes the default notation from your credit report, usually within 30 to 90 days of finishing. You can only rehabilitate a given loan once.
Direct Consolidation
Consolidating defaulted loans into a new Direct Consolidation Loan also gets you out of default. You’ll need to either make three consecutive on-time payments on the defaulted loan first or agree to enroll in an income-driven plan on the new consolidation loan. Consolidation is faster than rehabilitation but doesn’t remove the default from your credit history. For borrowers who need immediate access to income-driven plans or forgiveness, consolidation is often the practical choice.
If Your Loans Are Private
Private student loans do not qualify for income-driven repayment, PSLF, federal deferment, or any of the other federal programs on this page. Your options depend on what your lender is willing to offer, and you have to negotiate directly.
Most private lenders offer some hardship forbearance, typically in three- to six-month blocks, though terms vary. Some will agree to a temporary interest-only period or a modification that lowers your rate or stretches your term. These are concessions, not rights. Get any agreement in writing before you commit.
If you’re deeply behind, settlement is sometimes possible; a lender may take a lump sum less than the balance, especially on loans they’ve already written off. Forgiven private debt is taxable income, same as federal forgiveness.
One protection private borrowers do have: unlike federal loans, which have no time limit on collections, private loans are subject to state statutes of limitations that typically run three to ten years. Once the period expires, the lender can’t sue you to collect, though the debt doesn’t vanish and can still appear on your credit report. Making even a small payment on an old private debt can restart the clock in some states, so get legal advice before sending anything on an old private loan.
Bankruptcy as a Last Resort
Student loans can be discharged in bankruptcy, but the bar is much higher than for credit card or medical debt. Federal law excepts student loans from discharge unless you can show that repayment would impose an “undue hardship” on you and your dependents.14Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge
Most courts use the Brunner test.15Justia Law. Brunner v New York State Higher Education Services Corp You have to show that you can’t maintain a minimal standard of living while repaying, that the hardship is likely to persist for most of the repayment period, and that you made good-faith efforts to repay before filing. Some courts use a broader “totality of the circumstances” approach instead.
The process requires filing an adversary proceeding, essentially a separate lawsuit within your bankruptcy targeting your loan creditors. You’ll need a detailed budget, bank statements, pay stubs, job search records if unemployed, medical records if health issues limit your work, and evidence you tried to work with your servicer first. Discharge is uncommon but not impossible; borrowers with chronic health conditions, disabilities, or very low earning potential have the strongest cases. Attorney fees for an adversary proceeding can run from a few thousand dollars upward, which is a real barrier for borrowers who are already broke.
Watch for Relief Scams
Every federal repayment program, forgiveness application, and deferment request is free. No legitimate service charges upfront or monthly fees to enroll you in something your servicer will set up at no cost. Scammers exploit desperate borrowers by promising immediate cancellation for a fee.16Federal Student Aid. How To Avoid Student Loan Forgiveness Scams
Red flags: anyone who asks for your StudentAid.gov username and password (the Department of Education will never ask), urgency language like “act now before the program is discontinued,” and official-looking logos on emails sent from non-.gov addresses. If someone contacts you unsolicited about your loans, ignore them and go directly to StudentAid.gov or call your servicer.