Not Paying Student Loans? Can You Be Arrested?

Last updated 03/19/2024 by

Imagine you’re spending a lovely, quiet evening at home when you hear a knock at the door. You open it to find seven U.S. Marshals standing outside armed with combat gear. The last thing on your mind would be that they are showing up to your doorstep because you are not paying student loans.

Your mind starts to race, and you think to yourself, “What could I have possibly done to warrant this intrusion?” But you’re taken away in a police car before you can make your next move.

This scenario sounds like something out of a suspense film. Well, this was the case for 48-year-old Paul Aker. What was his crime? His crime was not paying a $1,500, 30-year overdue student loan bill.

Being behind in your student loan payments is common. According to the Federal Reserve, in 2015, 18% of people with outstanding student loans from their education were behind on their payments. That number increased to 19% in 2016, and again to 20% in 2017.

If you’re part of that 20%, you may be wondering if you can be arrested for defaulting on a student loan (or not paying student loans).

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Is jail a possibility due to not paying student loans?

If you are wondering if you can go to jail for not paying a loan, the quick answer is no.

The United States hasn’t had debtors’ prison for nearly two hundred years. As you probably guessed there is more to the story of Paul Aker. Paul Aker was put behind bars for failure to appear in court. If you have a U.S. marshal at your door because of student loans, you can be sure you have been ignoring court notices and summons for months or even years.

In the case of Winford P. (Paul) Aker, he did not answer a court summons, and a Default Judgment was entered on April 17, 2007. He was then served with a notice of post-judgment deposition and a subpoena. Aker ignored those also, so the U.S. filed a Motion to Compel his attendance in 2012. Again Aker was too busy, and an Order compelling his audience was entered on July 18, 2012. Then a second Order, which explained the consequences for noncompliance — i.e., prison — was issued. Incarceration for refusal with a court order is an expected outcome when you ignore a court order.

The apparent lesson is you should always appear in court when a judge summons you. But there is no need for such drama. It’s much better to get help with your student loans before judges and courts get involved. If you’re feeling the burden of student loan debt, you’re not alone. Fortunately, there are multiple student debt relief programs available.

What happens when you are not paying student loans?

If you don’t make payments on your student loans, your loan will become delinquent and you’ll risk going into default. Your account will remain delinquent until you’re caught up and current on your payments.

If your loan remains in the delinquent status for 90 days, your provider has the right to report this information to the three major credit bureaus. Remaining delinquent could negatively impact your credit score.

Once your loan moves into default status, it can have several consequences, including:

Your entire loan balance and interest may become immediately due.
You can’t receive deferment or forbearance status on your loan – both allow you to extend your loan payments based on your financial situation.
You may not receive additional federal student aid.
Your tax refund or other federal aid may be used for loan payments.
It’s possible to garnish your wages – your employer can hold a portion of your pay to make payments toward your loan.
A loan servicer could sue you.
It could prevent you from selling various assets, like real estate.
You can be charged additional costs including court costs, attorney fees, and other costs associated with the damages caused by non-payment.
It may be very challenging to re-establish good credit.
Lastly, your school can withhold your transcripts as they are the property of the school.

As you can see, failure to make payments could be more of a financial burden than you had anticipated. In the extreme case of Aker, you may face legal action.

But not to worry, there are many repayment options to consider if you’re struggling to keep up with payments.

Is it possible to get your student loans forgiven after 25 years?

You have several options for repaying your student loans, depending on whether you have federal or private loans.

Here are some of the repayment options available.

Depending on the repayment plan you decide to go with, it is possible to forgive your remaining loan balance after 20 to 25 years. Each method has different criteria for forgiveness.

For example, some plans may require you to pay income tax on the balance forgiven. Make sure to check your eligibility before moving forward with a federal student loan repayment plan.

What programs offer student loan forgiveness?

So, what programs offer student loan forgiveness? There are two types of forgiveness – Public Service Loan Forgiveness (PSLF) and Teachers Loan Forgiveness (TLF).

To receive PSLF, you must work for a qualifying non-profit or government organization and make 120 income-driven monthly student loan payments.

With a TLF, you must teach full-time and complete five years of continuous employment with a qualifying educational service agency or low-income school. Keep in mind; you must meet all qualifications for forgiveness up to $17,500.

Make sure you read the fine print and understand if you’re eligible for student loan forgiveness before proceeding. Student loan forgiveness is only available for eligible federal student loans.

What are my options if you don’t qualify for student loan forgiveness?

You can consolidate your federal loans using a Direct Consolidation Loan offered by the Department of Education. This option allows you to combine all of your federal student loans into one loan with a fixed interest rate.

Your new interest rate will be the average of your current loans. Combining all of your loans into one simplifies the payment process. Keep in mind; this option is exclusive to federal student loans.

Another option is to refinance your student loans with a private lender. Refinancing enables you to consolidate all of your student loans (both federal and private) into a new loan with new terms.

This option allows you to lock in a lower interest rate and reduce your monthly payment. So, if you have good credit and are in good financial standing, refinancing could help you pay off your student debt and save money.

Not paying a student loan? Take action before it’s too late

Financial distress can happen to anyone at any time. But can you go to jail if you don’t pay your student loans? Maybe, but it’s unlikely. Simply ignoring your student loans, however, will put your financial well-being in danger.

There are plenty of options available to help assist you with your repayment plan. Start by comparing today’s top student loan refinance lenders.

See which lenders can offer you competitive rates that beat what you’re currently paying. The quicker you take action, the faster you’ll become debt-free.

Ashley Chorpenning

Ashley is a personal finance writer. In addition to being a contributing writer at SuperMoney, she writes for solo entrepreneurs as well as for Fortune 500 companies. When she’s not calculating her net worth or reading the hot new finance book, you might find Ashley cage diving with great white sharks in South Africa.

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