Recovering from a Late Student Loan Payment: What to Do

It’s a common situation: In spite of your best intentions, you made a late student loan payment.

The word “delinquent” immediately flashes through your head, and you worry how the gaffe will affect your credit rating.

Don’t panic.

While a habit of late student loan payments will hurt affect your credit rating and cost you fees, the consequences for a first-time miss aren’t all that dire.

The grace period.

Yes, you are considered delinquent if your payment is even one day late. But that status is removed if you make a payment within your lender’s given grace period. Keep it mind, a delinquent status is not a “default,” which is imposed after multiple days of nonpayment.

Each lender sets its own grace period. During this time you won’t be charged a late fee for delinquent payments. Sallie Mae, for example, waits 15 days before imposing a charge of six percent of your minimum payment.

The takeaway: Save yourself the panic attack. Take five minutes to find out what your grace period is in case you make a late student loan payment.

Late payments and your credit score.

In most cases, late payments aren't reported to credit bureaus (and don't affect your credit rating) unless they're 45 days late — 90 days with federal student loans. If you exceed that grace period and the delinquency is added to your credit report, you can make a case to have it removed.  To do this, you'll need to provide your lender a brief explanatory letter and any documents proving the administrative error or another valid reason.

You'll have more luck if your repayment history has been solid, you take responsibility for the delinquency, and you’re polite and honest. Your lender will likely approve or reject your request within a week. You can also file a similar dispute with each credit reporting agency.

If you know you're going to make a late student loan payment, it’s a good idea to communicate with your banker. Being upfront and honest can sometimes remove late fees and/or extend the time frame before your delinquency is reported to credit agencies.

Avoid late payments in the future.

Consider setting up automatic bill payment through your bank to eliminate the hassle of remembering to mail it in. Be sure to check your student loan agreement to understand whether your payment will still go through if your account lacks adequate funds.

Late student loan payments are not the end of the world. By planning ahead, and automating your money, you can avoid ever missing a payment again.