Today, more than ever before, a college diploma or job-training credential is one of the best investments you can make in your future. By some estimates, a bachelor’s degree is worth an average of a million dollars over the course of your lifetime.
But college also has never been more expensive and far too many Americans are struggling to pay off their student loan debt.
Maybe you haven’t quite landed that dream job in your field of study yet. Or you decided to go into public service instead of taking the highest-paying offer. Your reward for investing your time and money in the skills and knowledge needed to secure your future shouldn’t be a sky-high monthly payment.
That’s why President Barack Obama has fought hard to make college more affordable and to help borrowers keep their student loan payments manageable. Today, thanks to those efforts, you never have to pay more than 10 percent of your monthly income on your federal student loans. Even if you’re temporarily unemployed, you’ve got options to stay on top of your loans—after all, 10 percent of zero dollars is zero dollars.
With the option to cap monthly payments based on income, everyone with a federal student loan should be able to manage his or her monthly loan payments and stay out of default. In fact, unlike with private loans, the federal loan repayment options are designed specifically to help student loan borrowers avoid default.
There are consequences if you do default—it’s bad for your credit and your financial future, for starters.
But to clear up misperceptions about one thing that’s not a consequence for falling behind on your student loans: going to jail.
America hasn’t had debtors’ prisons for nearly two centuries and you cannot be arrested simply for not paying your student loans.
Here’s the truth about what happens if you fall behind: the Department of Education’s loan servicers work for almost a year to contact borrowers who get off track on their payments. During that time, servicers work to inform the borrowers of their options to get back on track and the effects of defaulting.
If a borrower does default, the department attempts to establish repayment on the debt and then, if that doesn’t work, tries other methods to collect. Only if all other methods are unsuccessful does the Department of Education turn debt over to the Department of Justice for collection through litigation. The Department of Education is required to do that by law.
Referral of student loan cases for litigation is extremely rare—less than one tenth of one percent of all borrowers—but even then, borrowers are not arrested for nonpayment of their student loan.
If you’ve seen high-profile claims to the contrary, there’s probably more to the story.
Last month the Washington Post broke down one such case:
If you’ve defaulted on federal student loans, you can breathe more easily. You won’t be arrested for simply failing to make payments.
For a hot second, people were panicking after a Houston television station reported that a resident there, Paul Aker, had been arrested because he owed $1,500 for a federal student loan he took out in 1987…
Marshals had made several attempts to contact Aker to appear in federal court, according to Hunter. Notices were sent to numerous known addresses. Marshals spoke with Aker by phone and requested that he appear in court, but Aker refused, a statement from officials said. So a federal judge issued a warrant for Aker’s arrest for failing to appear at a December 2012 hearing.
“A big misconception is people are being arrested for not paying their loans, when in fact they are being arrested for failure to appear in court,” [chief deputy U.S. Marshal for the Southern District of Texas Richard] Hunter said. “At the point the U.S. marshals show up at your door, there have been months — perhaps many years — of notices, summons, et cetera, issued.”
One obvious lesson from this story is that if you’re summoned to court, you should appear. But the bigger picture is this: it’s much easier and better to get help with your loans well before it reaches that point. There are millions of Americans are feeling the burden of their college debt and new options have been created to help.
If you’re having trouble making your monthly payments, look into income-driven repayment plans. Again, these plans allow you to cap your payments at 10 percent of your monthly income—with payments that can be as low as $0 per month. And all income-driven repayment plans allow borrowers to have their remaining balances forgiven after they’ve made payments for either 20 or 25 years (depending on the plan). Even if you’ve already fallen behind on your loans, you can get back on track.
Visit studentaid.ed.gov to find out more about income-driven repayment options. Or, if you are having trouble repaying student loans and would like to discuss these options, reach out to your student loan servicer.
If you don’t know who your servicer is, call Federal Student Aid at 800-433-3243 or visit studentaid.ed.gov/login to find out.
Matt Lehrich is director of communications at the U.S. Department of Education.